Ryerson Holding Corp., a 172-year-old Chicago steel distributor, is preparing to go public for the second time in its history, but for a much lower price than it originally hoped.
The company, which has operations in the U.S. Mexico, Canada, China and Brazil, on Thursday slashed the proposed initial offer price for its planned stock sale to a high of $12 from $20, according to documents filed with the U.S. Securities and Exchange Commission.
With 11 million shares for sale, Ryerson estimates it will earn $110.7 million. That’s a decrease of more than $70 million over what it estimated on Tuesday.
The stock was set to be traded on the New York Stock Exchange under the symbol RYI on Thursday, but was held back for an undisclosed reason. It's unclear when it will start trading.
Ryerson, which processes and distributes steel, aluminum and other metals, once had a large presence in Chicago, where it began as an iron store along the Chicago river in 1842. In 2007, the company had 1,100 employees in the Chicago area, but 500 of them were laid off that year as the recession began to take hold.
Since 2007, the company has laid off about 1,700 workers in all and has closed 14 of its facilities in North America. In an effort to expand its geographic reach, it has bought stakes in several companies, including ones in Brazil and China, and has opened new facilities in Illinois, Texas, Georgia, Iowa, Utah and Mexico.
The company's once-massive physical footprint in Chicago, though, is starting to fade. In 2006, its coil pickling factory in Chatham shut down; today, there's a the Walmart there. Another former Ryerson facility is the site of a Lagunitas brewery and Cinespace Film Studios.
While the company once did most of its distribution from Chicago, in recent decades it has been setting up branch warehouses across the country in an effort to ship its products faster and customize them for local markets, said Dennis Hack, president at Standard Steel & Wire, who has worked in the local steel business for 32 years. That helped deplete its presence in Chicago, he said.
The exodus of steel manufacturing from the city also gave the company less reason to be here, Hack said.
The company was public before, but was taken private by Platinum Equity in 2007 for $1.06 billion after a struggle with another shareholder, Harbinger Capital Partners, over control of the company’s board. After the stock sale, Platinum will still own most of the company.
Ryerson’s net income nearly tripled from 2012 to 2013 even as sales declined, according to the SEC filing, mostly due to tax gains.
The company attributes the decline in sales to poor conditions in the metals market. More than half a decade since the recession walloped the steel industry, demand remains weak, said Andrew Lane, an analyst at Morningstar Inc.
“It’s been an extremely cyclic trough across the entire industry since 2008,” Lane said.
There are signs of life, though, Lane said, with demand for automobiles and residential construction picking up.
Source: The Chicago Tribune
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