Philadelphia Inquirer – A Miami hedge fund plans a $115 million initial public offering for Claymont Steel Holdings Inc. and would use the proceeds to reduce debt used largely for dividend payments to itself.
H.I.G. Capital bought Claymont Steel, formerly CitiSteel USA Holdings, in June 2005 for $75 million. Since then, according to an IPO prospectus the company filed with the Securities and Exchange Commission, it has paid itself $183 million in dividends, financed largely through issuing debt.
The bulk of the debt, $172 million in junk bonds, is due in 2010.
An attorney for Claymont Steel did not return a call seeking comment. An attorney for Jeffries & Co., the underwriter of the initial public offering, would not comment, citing SEC rules that govern what companies can say before an IPO. The company would trade on the Nasdaq Global Market; neither an offering date nor a price has been determined.
Claymont Steel, of Claymont, Del., manufactures plate steel out of scrapped railroad cars, automobiles, and other sources of scrapped steel. Financial statements in the offering prospectus, which was filed Monday with the SEC, show that it had revenue of $278.4 million in 2005, compared with $239.6 million in 2004.
