Selling steel

Birmingham Steel said yesterday that it is in exclusive discussions with Nucor Corporation regarding the sale of substantially all its assets for $615 million in cash.

The Company has signed a non-binding letter of intent with Nucor, which is conditioned upon finalising definitive documentation and related agreements in support of the transaction with the Company’s senior secured lenders.

Birmingham Steel said it expects to finalise discussions and definitive documentation with its lenders and Nucor prior to May 31, 2002. However, the Company said that it could not give assurance that acceptable definitive agreements can be completed with Nucor or the Company’s secured lenders on a timely basis.

The $615 million purchase price is less than the full amount of the Company’s secured debt, and the agreements between the parties would require the transaction be effected pursuant to a pre-arranged Chapter 11 filing approved by a bankruptcy court in Delaware.

The Company and its secured lenders are currently negotiating a pre-arranged plan agreement which, subject to the approval of the bankruptcy court, would provide that secured lenders distribute a portion of the proceeds from the transaction to unsecured creditors and shareholders.

The agreements under negotiation contemplate payments to Birmingham Steel shareholders of approximately $0.47 per share. The agreements contemplated by the Company, its secured lenders and Nucor would also provide for full and uninterrupted payments to the Company’s critical suppliers through the anticipated closing date of the transaction.

On or before May 31, 2002, the Company expects to have completed the agreements relating to the proposed transaction with Nucor or to have identified an alternative course of action

The Company said other possible courses of action include, but are not necessarily limited to, seeking protection under a Chapter 11 filing, extending the CIBC engagement to determine other strategic alternatives, re-engaging in discussions with other potential purchasers, seeking extensions of the maturity dates of debt due on May 31, or seeking a restructuring of its debt with current lenders.

For the three months ended March 31, 2002, Birmingham Steel reported a net loss from continuing operations of $9,192,000 ($0.29 per share), compared with a loss of $4,431,000 ($0.14 per share) in the third quarter of the prior fiscal year.