Alloy Steel International and Kostecki Brokerage Pty Ltd Announce Merger Agreement

Rhea-AI Summary

Alloy Steel International, Inc. (OTC: AYSI) has entered into a merger agreement with Kostecki Brokerage Pty Ltd, whereby KBPL will acquire the non-controlling shareholders' interest in Alloy Steel for $2.55 per share, totaling approximately $40.6 million in market capitalization. The deal, unanimously approved by the Board, aims to enhance the company's competitive position as a private entity and provide liquidity to minority shareholders. The transaction's completion is subject to regulatory and shareholder approvals.

Positive

• Kostecki family's acquisition provides liquidity to minority shareholders at a fair value exceeding historical trading prices.
• The merger could lead to improved competitive positioning for Alloy Steel as a privately held company.

Negative

• Completion of the merger is contingent upon regulatory and stockholder approvals, introducing uncertainty.

PERTH, Australia, July 27, 2021 /PRNewswire/ -- Alloy Steel International, Inc. (OTC: AYSI) ("Alloy Steel" or "Company") the manufacturer of Arcoplate and provider of anti-wear and hang-up solutions to the mining and bulk materials industries, based in Perth, Western Australia, and Kostecki Brokerage Pty Ltd (a wholly owned entity owned by the Kostecki family) today announced that they have entered into a definitive merger agreement under which Kostecki Brokerage Pty Ltd ('KBPL") will acquire the non-controlling shareholders' interest in the Company in an all cash transaction. Under the agreement, the Company's shareholders, excluding the Kostecki family and its affiliated entities, will receive $2.55 per share in cash upon completion of the transaction for a total implied market capitalization of the Company of approximately $40.6 million.

The Special Committee, comprised of independent members of the Board of Directors (the "Board") of the Company was formed in May 2021 to review the proposal from the Kostecki family and, with the assistance of independent legal and financial advisors, completed a thorough review of the proposal, unanimously concluding that the transaction with the Kostecki family was in the best interests of the Company's shareholders. Based on the unanimous recommendation of the Special Committee, the agreement was also approved by the full Board.

According to Mr. Steven Kostecki, Director of KBPL, "the Kostecki family, with a 65% majority ownership interest in the Company, believes that the Company can better compete in its markets as a privately held company. The family believes that the cash transaction will provide non-controlling shareholders with certainty of value and liquidity at a fair value which exceeds the Company's historical trading price."

According to Mr. Alan Scott, the Company's Chairman of the Board, and a member of the Special Committee, "we believe that the proposed transaction provides the Company with the opportunity to improve its competitive position as a privately held company and provide liquidity to its minority shareholders, which has been historically lacking." He added that, "the Special Committee and the Board believe it is a good time to privatize the Company with expected competitive benefits for the business as well as providing a good result for our minority shareholders."

Jaffe Raitt Heuer & Weiss, P.C. served as legal advisor to the Company. Conner & Winters, LLP served as legal advisor to the Special Committee. Davis Graham & Stubbs LLP served as legal advisor to Kostecki Brokerage Pty Ltd.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words like "may," "will," "likely," "should," "expect," "anticipate," "future," "plan," "believe," "intend," "goal," "seek," "estimate," "project," "continue," and variations of such words and similar expressions. These forward-looking statements are not guarantees of future performance and involve risks, assumptions, and uncertainties, including, but not limited to, risks related to: (i) the satisfaction of the conditions to closing the transaction in the anticipated timeframe or at all; (ii) the failure to obtain necessary regulatory and stockholder approvals; (iii) the ability to realize the anticipated benefits of the transaction; (iv) disruption from the transaction making it more difficult to maintain business and operational relationships; (v) the negative effects of this announcement or the consummation of the proposed transaction on the market price of the Company's common stock; (vi) significant transaction costs and unknown liabilities; and possible (vii) litigation or regulatory actions related to the proposed transaction. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by these forward-looking statements. Therefore, you should not rely on any of these forward-looking statements.

The forward-looking statements included in this press release are made only as of the date of this release, and except as otherwise required by federal securities law, neither the Company nor Kostecki Brokerage Pty Ltd assume any obligation nor do they intend to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.

Additional Information and Where to Find It

In connection with the proposed transaction, the Company will mail a proxy statement to each stockholder entitled to vote at the special meeting relating to the transaction. INVESTORS AND STOCKHOLDERS ARE URGED TO CAREFULLY READ THE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO AND ANY DOCUMENTS INCORPORATED BY REFERENCE THEREIN) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE TRANSACTION WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION AND THE PARTIES TO THE TRANSACTION. The proxy statement and other relevant materials in connection with the transaction (when they become available) may be obtained free of charge from the Company upon request.

The Company and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the Company's stockholders in connection with the transaction. Information regarding the interests of such individuals in the proposed transaction will be included in the proxy statement relating to such transaction. These documents may be obtained free of charge from the Company upon request.

ENQUIRIES
Thushara (Sam) Dahanayake
Company Secretary
+61 8 9248 3188
samd@alloysteel.net

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SOURCE Alloy Steel International, Inc.

FAQ

What is the significance of the merger agreement between Alloy Steel International and Kostecki Brokerage (AYSI)?

The merger aims to provide liquidity to minority shareholders and enhance Alloy Steel's competitive position as a private entity.

What is the cash offer price for shareholders of Alloy Steel International in the merger?

Shareholders will receive $2.55 per share in cash upon completion of the merger.

When was the merger agreement between Alloy Steel International and Kostecki Brokerage announced?

The merger agreement was announced on July 27, 2021.

What market capitalization value does the merger imply for Alloy Steel International?

The merger implies a market capitalization of approximately $40.6 million for Alloy Steel.

What are the risks associated with the merger of Alloy Steel International (AYSI)?

Risks include dependency on regulatory and stockholder approvals and potential disruption to business relationships.