Steel Dynamics and OmniSource Complete Acquisition

Steel Dynamics Inc., Fort Wayne, Ind., has announced that OmniSource Corp., a wholly-owned subsidiary of Steel Dynamics, completed the recently announced acquisition of Recycle South, LLC, on June 10, 2008. Recycle South, one of the largest regional scrap metal recycling companies in the nation, is headquartered in Spartanburg, S.C.

OmniSource (which already owned 25 percent of Recycle South) acquired the remaining 75 percent equity interest for a purchase price of approximately $515 million, comprised of 3,938,000 shares of Steel Dynamics common stock, valued at approximately $140 million; cash of $232 million; and the assumption of certain liabilities, including net debt of approximately $143 million, according to the company press release. This results in a total enterprise value of about $640 million.

Recycle South employs 700 people in 22 locations throughout North Carolina, South Carolina and Georgia. On an annualized basis using actual results from September of 2007 to April of 2008, the company generated revenues of approximately $730 million and earnings before interest, taxes, depreciation and amortization of approximately $105 million from the processing of 1.4 million tons of ferrous scrap and 150 million pounds of nonferrous scrap, the press release states.

The company will operate as a division of OmniSource Corp., and will be called OmniSource Southeast. As part of OmniSource, all current management will remain in place and will continue to focus on ferrous and nonferrous scrap processing, brokerage and the industrial scrap management needs of its customers, the company says.

Keith Busse, chairman and CEO of Steel Dynamics says, "This transaction significantly expands our recycled metals business platform created by the acquisition of OmniSource in October 2007. It demonstrates SDI's strategic commitment to the continued expansion of ferrous and nonferrous recycling, which is an important element of our overall growth plan. The additional capacity of the Recycle South operations brings our company's total annual ferrous scrap processing capacity to approximately seven million tons. The addition of the Recycle South business to OmniSource will increase both the size and scope of our scrap operations, and establish a platform for continued growth."

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Marvin Siegel, chairman and CEO of Recycle South says, "We look forward to the next stage of our involvement with OmniSource and are excited to join the Steel Dynamics team. Our existing working relationship will make for a natural transition allowing us to sustain our growth pattern and maintain the highest level of service to our customers. Our strength has always been based in the Southeast and we are now excited to provide regional leadership as part of a larger network of companies."