SDI Acquires CRG, Atlantic Scrap

Steel Dynamics Inc. (SDI), through its OmniSource Corp. subsidiary, has acquired full ownership of Recycle South, a multi-location scrap company in which OmniSource already owned a 25 percent stake.

Recycle South, one of the largest regional scrap metal companies in the Southeast, was formed in August 2007 with the merger of Carolinas Recycling Group and Atlantic Scrap and Processing. Recycle South is headquartered in Spartanburg, S.C.

Terms of the agreement, which has been unanimously approved by the boards of directors of both companies, call for OmniSource to acquire remaining equity interests in a transaction valued at approximately $500 million.

Current Recycle South equity owners will receive nearly 4 million shares of Steel Dynamics common stock, valued at approximately $138 million, and $232 million in cash. The aggregate transaction value includes the assumption of certain liabilities, including net debt, which are expected to total approximately $135 million at closing. Completion of the transaction is subject only to regulatory approval, and is expected to close before the end of the second quarter of 2008.

Recycle South employs 600 people in 19 locations throughout North Carolina, South Carolina, and Georgia. On an annualized basis using actual results from September of 2007 to March of 2008, the company generated revenues of approximately $670 million from the processing of 1.4 million tons of ferrous scrap and 150 million pounds of nonferrous scrap. 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.

Keith Busse, Chairman and CEO of Steel Dynamics comments, “This transaction significantly expands our recycled metals business platform created by the acquisition of OmniSource in October of 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.”

Adds Danny Rifkin, President of OmniSource, “This transaction demonstrates the company’s willingness to capitalize on growth opportunities within the scrap processing segment and expand our geographic footprint into a region where both industrial and obsolete scrap generation is increasing. Having been partners with the members of Recycle South for some time, we are confident that integration efforts will be accomplished in a timely and efficient manner, allowing us to pursue further growth in this and other regions.”

Marvin Siegel, Chairman and CEO of Recycle South comments, “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.”

Steel Dynamics Inc. bills itself as the fifth largest producer of carbon steel in the U.S. It produces steel from recycled steel scrap in five electric arc furnace mini-mills, and shipped 5.6 million tons of steel in 2007 and had consolidated revenue of $4.4 billion. Including scrap processing facilities previously owned by SDI, OmniSource now processes and trades metallic scrap at 50 locations in the Eastern U.S. and Canada. Steel Dynamics currently employs about 6,000 people.

Recycle South LLC was formed in August 2007 by the merger of Carolinas Recycling Group LLC and Atlantic Scrap and Processing LLC, both of which were sizeable processors preceding the merger. On an annualized basis using actual results from September of 2007 to March of 2008, Recycle South generated revenue of approximately $670 million from the processing of 1.4 million tons of ferrous scrap and 150 million pounds of nonferrous scrap. The company has  19 locations in the Carolinas and Georgia.