A.M. Castle & Co., a global distributor of specialty metal and plastic products, value-added services and supply chain solutions, announced today that it has closed a transaction with Triple-S Tube Supply, LP and Triple-S Tube Supply ULC for the sale of inventory from Castle’s Edmonton and Houston facilities that primarily service the oil and gas industries. Net cash proceeds of the transaction are expected to be approximately $27.5 million, with 90 percent of the gross consideration paid at closing, and the remainder, subject to certain adjustments, payable by December 31, 2016. Net proceeds will be used to reduce borrowings outstanding under the Company’s revolving credit facility.
Pat Anderson, Executive Vice President & Chief Financial Officer said, “In addition to these sales, we expect to generate further proceeds from the sale of equipment related to the facilities. Following the completion of the transfer of these energy-related assets to Triple-S Tube Supply, we will officially close our Houston and Edmonton facilities. We believe that the savings associated with the closing of these facilities will improve our ability to generate cash from operations, which we intend to reinvest in the business to better position the Company for long-term success.”
As a part of the transaction, Triple-S Tube Supply will also purchase the trade name rights to the Tube Supply brand. Castle will assist Triple-S Tube Supply in the transferring of the inventory from the facilities scheduled to be completed by December 31, 2016. Triple-S Tube Supply will provide its own sales staff and administrative support. A.M. Castle will transfer some of its employees from the Houston and Edmonton facilities to other Company locations, and other employees will be encouraged to join Triple-S Tube Supply.