Schuff International, Inc. (OTC:SHFK), a family of companies providing fully integrated steel construction services, announced today that it has entered into two key agreements that will replace nearly $60 million of its near-term, higher-cost obligations with long-term, lower-cost debt.
The company announced a purchase agreement with Plainfield Asset Management LLC for the sale of $30 million of 7% Convertible Subordinated Notes due 2013. The notes will be issued at 98% of the principal amount. The purchase agreement was signed on August 31, 2006, and is scheduled to close prior to the partial call date of September 29, 2006. The notes, due September 2013, carry a seven-year term non-callable, and are convertible into 2.5 million shares of Schuff International common stock at the option of the holder at a conversion price of $12.00. The notes accrue interest that will be payable semiannually.
Schuff International intends to use the net proceeds from the offering to repay existing indebtedness -- including the retirement of $30 million of its outstanding $75 million 10.5% publicly held senior unsecured notes due June 1, 2008, at a price of 101.313% of face value, plus accrued interest.
In addition, the company announced that it has elected to redeem an additional $29.2 million in principal of its senior notes at a price of 101.313% of face value, plus accrued interest. The source of these funds was available cash and a $25 million expansion of its existing credit facility with Wells Fargo Bank.
As a result of these transactions, the balance of the company's 10.5% senior notes due June 1, 2008 is $15 million.
Separately, Schuff International announced that the Schuff family, through The Schuff Family Trust, The Schuff Irrevocable Trust and David A. Schuff, completed the private sale of 1.5 million shares of Schuff International common stock held by the Schuff family to D. E. Shaw Laminar Portfolios, LLC and Plainfield on a 50-50 basis at a price of $12.00 per share. Following the transaction, which was completed on August 31, 2006, the Schuff family owns 49.3% of shares outstanding, Laminar and Plainfield collectively own approximately 29.5% and others own 21.2%. Percentages for Laminar and Plainfield do not reflect the conversion of the notes into shares of Schuff International common stock as set forth above.
The notes, and the common stock issuable upon conversion of the notes, and the shares of common stock sold by the Schuff family have not been registered under the Securities Act of 1933, or any state securities laws, and may not be offered or sold in the United States except pursuant to an effective registration statement or an exemption from the registration requirements of the Securities Act of 1933 and applicable state securities laws.
This news release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities law of any such state or jurisdiction.
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