IMCO Recycling to Acquire Alchem Aluminum, Inc., A Supplier to the Automobile Industry
18 September 1997
IMCO Recycling to Acquire Alchem Aluminum, Inc., A Supplier to the Automobile Industry
IRVING, Texas, Sept. 18 -- IMCO Recycling Inc.
today announced that it has agreed to acquire Alchem Aluminum, Inc., a
privately owned producer of specification aluminum alloys for automobile
manufacturers and their suppliers.
The purchase price will total $49.3 million paid through the issuance of
new IMCO Recycling common shares and the assumption of debt in a privately
negotiated transaction.
Don V. Ingram, IMCO's chairman and chief executive officer, said the
acquisition "will allow us to increase our services to the auto industry and
further expand our participation in the transportation sector, the largest and
fastest-growing aluminum market. When the Alchem acquisition is completed,
about 30 percent of our annual domestic capacity will be supplied to the
transportation sector, up from less than five percent in 1994. In addition,
this acquisition and expansions we will complete this year will increase
IMCO's 1998 annual processing capacity by some 14 percent to a total of about
2.6 billion pounds.
"Alchem, whose management team will be joining IMCO, has achieved a strong
reputation in the secondary aluminum industry because of its long-term
stability and its commitment to producing high-quality specification aluminum
alloys," he said. "We are confident that this acquisition will enhance the
value of our stockholders' investment in IMCO by improving our market
position, processing volume, revenues and earnings per share."
William Warshauer, chief executive of Alchem Aluminum, said, "We are
pleased to become a part of IMCO Recycling because of the two companies'
history of successful cooperation that includes the building of joint venture
facilities. The combined organization will have significant growth
opportunities and the ability to provide expanded services to customers."
Alchem's annual revenues are about $120 million. Its customers include
Ford Motor Company, General Motors, Toyota Tsusho America, Inc., producers of
automobile castings and other aftermarket suppliers.
Alchem's operations and headquarters are located in Coldwater, Michigan
where it has about 190 employees. Many of the company's customers are located
within 150 miles of Coldwater, which allows Alchem to ship a large amount of
its production in molten form. This delivery method saves customers the time
and cost normally required for remelting.
In addition, the company's proximity to many industrial producers helps
insure a consistent supply of high quality metal units used in the production
of secondary aluminum alloys.
Alchem's production plant is equipped with on-site crushers, dryers and
reverberatory furnaces and can efficiently process a wide range of materials.
The company has made significant investments in this facility and its annual
shipments rose from 72 million pounds in 1992 to 143 million pounds in 1996,
an increase of 97.4 percent. The plant's production is expected to exceed
160 million pounds in 1997.
Alchem's primary products are specification alloys delivered in ingot, sow
or molten form. In addition, the company provides on-site consulting for
customers by a staff metallurgist and process engineers. These services
include involvement in the developmental stage of metal specifications, custom
design of metal management programs and overall improvement of customers'
production processes.
Alchem's production capacity and efficiency are benefiting from delivery
of molten metal from a new aluminum recycling facility that is 75 percent-
owned by IMCO and 25 percent-owned by Alchem. Construction of this plant,
which is across the street from the Alchem facility and has an annual capacity
of 150 million pounds, began in 1996 and is now complete.
IMCO and Alchem are also joint venture partners in a project that will
allow the shipment of specification aluminum alloys from IMCO's Loudon,
Tennessee plant to a new customer facility in Knoxville. This plant will use
the metal to manufacture brake calipers for major auto producers. Shipments
are expected to begin in the first quarter of 1998.
The principal terms of the acquisition announced today, which is expected
to be completed in the fourth quarter, are subject to the signing of a
definitive agreement and regulatory approval.
IMCO Recycling Inc. is the world's largest aluminum recycler and also
processes zinc and magnesium. The company has 15 U.S. production facilities
and owns 50 percent of a joint venture that operates two recycling and foundry
alloy plants in Germany. It is also building an aluminum recycling plant in
Swansea, Wales that is expected to begin operating by the end of 1997. IMCO
Recycling's headquarters is in Irving, Texas.
Forward-looking statements made in this news release including statements
concerning future services, market position, growth prospects, volume, and
earnings, are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned that all
forward-looking statements involve risks and uncertainties, and that actual
results could differ materially from those described therein. These risks and
uncertainties would include, without limitation, risks related to business
conditions and growth in the aluminum and aluminum recycling industries as
well as the automotive industry and the general economy; the price of aluminum
on world and U.S. markets; fluctuations in customer demand and the price for
the company's services and metal; the retention of major customers; changes in
the many factors affecting the company's revenues and costs, including energy
costs and weather conditions; the future mix of buy/sell vs. tolling business;
currency exchange fluctuations; the timing and amounts of collections;
operating levels of the company's various facilities; future levels and timing
of capital expenditures; and other risks listed in the company's filings with
the Securities and Exchange Commission, including but not limited to the
report on Form 10-Q for the quarter ended June 30, 1997, particularly the
"Cautionary Statement For Purposes of Forward-Looking Statements" contained
therein.
SOURCE IMCO Recycling Inc.