UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 8K

 

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported) December 31, 2003

 

QUANEX CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Item 1.  Changes in Control of Registrant

Not applicable.

 

Item 2.  Acquisition or Disposition of Assets

 

On December 31, 2003, Quanex Corporation (the “Company”) completed its acquisition of TruSeal Technologies Inc. (“TruSeal”) pursuant to the Stock Purchase Agreement dated as of November 21, 2003, by and among Quanex Corporation, Kirtland Capital Partners II L.P., Kirtland Capital Company II LLC, TruSeal Investments Ltd. and the other stockholders of TruSeal Technologies, Inc. for $113.0 million in cash, subject to adjustment.

 

TruSeal manufactures and markets a full line of patented and trademarked flexible insulating glass spacer systems and sealants for vinyl, aluminum and wood windows.  The product separates and seals the glass within a window frame and acts as a thermal barrier to conserve energy and resist moisture.  Manufacturing is based out of Barbourville, Kentucky.  The Company intends to continue to operate TruSeal in the same manner.

 

A copy of the Stock Purchase Agreement is attached as Exhibit 2.6 to the Company’s Annual Report on Form 10-K filed with the SEC on December 29, 2003.  A copy of the Company’s press release announcing the closing of the TruSeal acquisition is attached hereto as Exhibit 99.1.

 

On January 1, 2004, the Company announced that on December 31, 2003, MACSTEEL Monroe, Inc., a wholly-owned subsidiary of Quanex Corporation, completed its acquisition of the Monroe, Michigan steel mill of North Star Steel Company (“North Star”) pursuant to the Amended and Restated Asset Purchase and Sale Agreement dated December 23, 2003, by and among MACSTEEL Monroe, Inc., Quanex Corporation, and North Star Steel Company for $115.0 million in cash, subject to adjustment.

 

The manufacturing facility and related assets purchased is a mini-mill facility that can produce over 500,000 tons of special bar quality and engineered steel bars in diameters from 0.5625” to 3.25”, primarily serving the light vehicle and heavy-duty truck markets.  The newly acquired business has both process and environmental ISO and QS certifications.  The Company intends to continue to use the assets purchased in the same manner.

 

A copy of the Amended and Restated Asset Purchase and Sale Agreement is attached as Exhibit 2.7 to the Company’s Annual Report on Form 10-K filed with the SEC on December 29, 2003.  A copy of the Company’s press release announcing the closing of the North Star acquisition is attached hereto as Exhibit 99.2.

 

The two acquisitions were financed through borrowings under the Company’s revolving credit agreement with Comerica Bank and a syndicate of other banks, which was amended on December 19, 2003 to increase the capacity to $310.0 million. The amount of consideration for the transactions was determined based upon arm’s length negotiations among the parties. Neither the Company nor any of its officers, directors or affiliates has any material relationship with the selling parties.

 

Item 3.  Bankruptcy or Receivership

Not applicable.

 

Item 4. Changes in Registrant’s Certifying Accountant

Not applicable.

 

Item 5.  Other Events and Regulation FD Disclosure

Not applicable.

 

Item 6.  Resignations of Registrant’s Directors

Not applicable.

 

2

 

Item 7.  Financial Statements and Exhibits

 

(a) Financial Statements of Businesses Acquired

Not applicable.

 

(b) Pro Forma Financial Information

Not applicable.

 

(c) Exhibits

 

2.1                                 Stock Purchase Agreement dated November 21, 2003, by and among Kirtland Capital Partners II L.P., Kirtland Capital Company II LLC, TruSeal Investments Ltd., the other stockholders of TruSeal Technologies, Inc., and Quanex Corporation (incorporated herein by reference to exhibit 2.6 to Quanex Corporation’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 29, 2003).

 

2.2                                 Amended and Restated Asset Purchase and Sale Agreement dated December 23, 2003, by and between North Star Steel Company, MACSTEEL Monroe, Inc. (formerly Quanex Two, Inc.), and Quanex Corporation (incorporated herein by reference to exhibit 2.7 to Quanex Corporation’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 29, 2003).

 

99.1                           Press Release dated December 31, 2003, announcing the closing of the TruSeal Technologies Inc. acquisition.

 

99.2                           Press Release dated January 1, 2004, announcing the closing of the North Star Steel - Monroe acquisition.

 

Item 8.  Change in Fiscal Year

Not applicable.

 

Item 9.  Regulation FD Disclosure

Not applicable.

 

Item 10.  Amendments to the Registrant’s Code of Ethics, or Waiver of a Provision of the Code of Ethics

Not applicable.

 

Item 11.  Temporary Suspension of Trading Under Registrant’s Employee Benefit Plans

Not applicable.

 

Item 12.  Results of Operations and Financial Condition

Not applicable.

 

3

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

				Quanex Corporation
Date:	January 6, 2004			By:	/s/ Terry M. Murphy
					Terry M. Murphy
					Vice President – Finance and Chief Financial Officer
					(Principal Financial Officer)

 

4

 

INDEX TO EXHIBITS

 

Exhibit Number		Description of Exhibits
2.1		Stock Purchase Agreement dated November 21, 2003, by and among Kirtland Capital Partners II L.P., Kirtland Capital Company II LLC, TruSeal Investments Ltd., the other stockholders of TruSeal Technologies, Inc., and Quanex Corporation (incorporated herein by reference to exhibit 2.6 to Quanex Corporation’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 29, 2003).
2.2		Amended and Restated Asset Purchase and Sale Agreement dated December 23, 2003, by and between North Star Steel Company, MACSTEEL Monroe, Inc. (formerly Quanex Two, Inc.), and Quanex Corporation (incorporated herein by reference to exhibit 2.7 to Quanex Corporation’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 29, 2003).
99.1*		Press Release dated December 31, 2003, announcing the closing of the TruSeal Technologies Inc. acquisition.
99.2*		Press Release dated January 1, 2004, announcing the closing of the North Star Steel - Monroe acquisition.

 

*       Filed herewith

 

5

Exhibit 99.1

 

 

		NEWS RELEASE
Contacts:	Jeff Galow, 713/877-5327
	Valerie Calvert, 713/877-5305

 

Quanex Closes the TruSeal Technologies Inc. Acquisition

Acquisition Broadens Quanex’s Door and Window Component Offering

 

Houston, Texas, December 31, 2003 - Quanex Corporation (NYSE:NX), an industry-leading manufacturer of engineered materials and components for the Vehicular Products and Building Products markets, today announced the closing of the stock purchase of TruSeal Technologies Inc., from Kirtland Capital Partners, for $113 million in cash.  The Company financed the acquisition by borrowing against its $310 million revolving credit facility.

 

TruSeal manufactures and markets a full line of patented and trademarked flexible insulating glass spacer systems and sealants for vinyl, aluminum and wood windows.  The product separates and seals the glass within a window frame and acts as a thermal barrier to conserve energy and resist moisture.  With approximately $80 million in revenues and 300 employees, the acquisition will be accretive to earnings in year one.  The business will become part of Quanex’s Building Products segment.

 

“TruSeal is a leading manufacturer in their niche fenestration (door and window) market and the acquisition compliments our efforts to provide our building product customers with a broader range of high quality components and products,” stated Raymond Jean, chairman and chief executive officer of Quanex.  “Today, some 90% of all windows manufactured feature insulating glass, and with window demand increasing faster than new home starts, the outlook for this business is excellent.  TruSeal also provides a level of customer diversification for us as they have a broad presence in the vinyl and aluminum window markets, whereas Quanex’s niche is primarily with the wood window OEM’s.  Our purchase of TruSeal serves as an excellent example of the type of acquisition we will make as we profitably grow Quanex’s core businesses,” said Jean.

 

Quanex Corporation, founded in 1927, is based in Houston, Texas.  For further information, visit the Company’s website at www.quanex.com or the TruSeal website at www.truseal.com.

 

Statements that use the words “expect,” “should,” “will,” “might,” “gauge”  or similar words reflecting future expectations or beliefs are forward-looking statements.  The statements above are based on current expectations.  Actual results or events may differ materially from this release.  Factors that could impact future results may include, without limitation, the effect of both domestic and global economic conditions, the impact of competitive products and pricing, and the availability and cost of raw materials.  For a more complete discussion of factors that may affect the Company’s future performance, please refer to the Company’s most recent 10-K filing (December 29, 2003) under the Securities Exchange Act of 1934, in particular the sections titled, “Private Securities Litigation Reform Act” contained therein.

###

 

Exhibit 99.2

 

 

		NEWS RELEASE
Contacts:	Jeff Galow, 713/877-5327
	Valerie Calvert, 713/877-5305

 

QUANEX CLOSES THE NORTH STAR STEEL - MONROE ACQUISITION

Acquisition Increases Quanex’s Engineered Steel Bar Capacity

 

Houston, Texas, January 1, 2004 — Quanex Corporation (NYSE:NX), an industry-leading manufacturer of engineered materials and components for the Vehicular Products and Building Products markets, today announced the closing of the asset purchase of the Monroe, Michigan steel mill of North Star Steel, a subsidiary of Cargill, Incorporated, for $115 million in cash.  The Company financed the acquisition by borrowing against its $310 million revolving credit facility.

 

The mini-mill facility can produce over 500,000 tons of special bar quality and engineered steel bars in diameters from 0.5625” to 3.25”, primarily serving the light vehicle and heavy-duty truck markets.  The newly acquired business, with approximately $175 million annualized sales and 380 employees, will be integrated with MACSTEEL and renamed MACSTEEL Monroe.  The facility has both process and environmental ISO and QS certifications.

 

“The acquisition of Monroe directly supports and benefits our core MACSTEEL business and enhances our efforts to provide Quanex’s vehicular customers with a broader range of high quality bar products,” said Raymond A. Jean, chairman and chief executive officer of Quanex.  “Monroe’s production of smaller diameter bars complements MACSTEEL’s 1” to 6” size range and expands our customer base and product offerings.  Monroe is a profitable operation and we expect earnings accretion in year one.  The integration of the three mills from an operational planning standpoint will provide attractive opportunities for productivity gains.  Acquiring Monroe is exactly the type of acquisition we seek as we profitably grow Quanex’s core businesses,” said Jean.

 

Quanex Corporation, founded in 1927, is based in Houston, Texas.  For further information, visit the Company’s website at www.quanex.com or the MACSTEEL website at www.macsteel.com.

 

Statements that use the words “expect,” “should,” “will,” “might,” “gauge” or similar words reflecting future expectations or beliefs are forward-looking statements.  The statements found above are based on current expectations.  Actual results or events may differ materially from this release.  Factors that could impact future results may include, without limitation, the effect of both domestic and global economic conditions, the impact of competitive products and pricing, and the availability and cost of raw materials.  For a more complete discussion of factors that may affect the Company’s future performance, please refer to the Company’s most recent 10-K filing (December 29, 2003) under the Securities Exchange Act of 1934, in particular the sections titled, “Private Securities Litigation Reform Act” contained therein.

 

###