Steel Dynamics Completes Major Acquisition

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Fort Wayne-based Steel Dynamics Inc. (Nasdaq: STLD) says it has completed a more than $1.6 billion acquisition. The company says the deal for Severstal Columbus LLC increases its annual steel shipping capacity by 40 percent.

September 16, 2014

News Release

Fort Wayne, Ind. -- Steel Dynamics, Inc. (NASDAQ/GS: STLD) today announced the completion of the acquisition of Severstal Columbus, LLC ("Columbus"), one of the newest and most technologically advanced mini-mills in North America. As previously announced, the purchase price for Columbus was $1.625 billion in cash, with customary transaction purchase price adjustments, and has been funded with approximately $350 million of available cash, new senior unsecured notes in the amount of $1.2 billion, and borrowings on the company's revolving credit facility.

"I would like to enthusiastically welcome the Columbus employees, community, and customers into the Steel Dynamics family," stated Mark D. Millett, Chief Executive Officer. "The successful completion of the Columbus acquisition is an important milestone for Steel Dynamics and represents a significant step in the continuation of our growth strategy. The expected cash and earnings per share accretion and increased scale make this transaction a noteworthy strategic opportunity for our shareholders and all of our employees."

The acquisition of Columbus significantly expands and diversifies the company's steel operating base, increasing Steel Dynamics' annual steel shipping capacity to 11.0 million tons, a 40 percent increase. For the twelve months ended June 30, 2014, pro forma revenue was $9.7 billion and pro forma Adjusted EBITDA was $965 million (Note 1), with Columbus contributing $2.2 billion and $254 million, respectively. The additional exposure to the high-growth oil country tubular goods and automotive markets complements Steel Dynamics' product offerings. Additionally, Columbus is advantageously located in Mississippi to serve the high-growth markets in the Southern U.S. and Mexico, providing both geographic diversification and growth opportunities for Steel Dynamics.

Note 1: Pro forma EBITDA is defined as the pro forma net income attributable to Steel Dynamics, Inc. before pro forma interest expense, net of interest income, pro forma income taxes, and pro forma depreciation and amortization. Pro forma Adjusted EBITDA is defined as pro forma EBITDA adjusted for certain non-cash items such as pro forma equity based compensation, pro forma unrealized hedging losses on commodities derivatives, pro forma lower of cost or market inventory valuation, and pro forma asset impairments. The company believes that pro forma EBITDA and pro forma Adjusted EBITDA are useful indicators of performance and ability to meet debt service and capital expenditure requirements. They are not, however, intended as alternative measures of operating results or cash flow from operations as determined in accordance with generally accepted accounting principles, and they may not necessarily be comparable to similarly titled measure used by other companies.

About Steel Dynamics, Inc.

Steel Dynamics, Inc. is one of the largest domestic steel producers and metals recyclers in the United States based on estimated annual steelmaking and metals recycling capability, with annual sales of $7.4 billion in 2013, over 7,400 employees, and manufacturing facilities primarily located throughout the United States (including six steel mills, six steel processing facilities, two iron production facilities, over 90 metals recycling locations and six steel fabrication plants).

Source: Steel Dynamics Inc.