Gerdau Ameristeel Completes US$4.22B Acquisition of Chaparral Steel

Gerdau Ameristeel Corporation completed its acquisition of Chaparral Steel Company for US$86 per share in cash, on September 14, 2007, valuing Chaparral Steel's equity at US$4.22 billion. Concurrently with the acquisition, Gerdau Ameristeel made a tender offer for Chaparral Steel's outstanding 10 per cent senior notes.

Gerdau Ameristeel's acquisition of Chaparral Steel was financed, in part, by a US$1.15 billion bridge loan facility and a US$2.75 billion term loan facility, which were provided by two separate international banking syndicates, each arranged by ABN AMRO Bank N.V., HSBC Securities (USA) Inc. and JP Morgan Securities, Inc. (financial adviser to Gerdau Ameristeel and Gerdau Group).

Gerdau Ameristeel, headquartered in Toronto, is the second-largest mini-mill steel producer in North America, with a vertically integrated network of 19 mini-mills (including one 50 per cent-owned mini-mill), 19 scrap recycling facilities and 54 downstream operations. Chaparral Steel, based in Midlothian, Texas, is the second-largest producer of structural steel products in North America and a major producer of steel bar products.

Torys LLP represented Gerdau Ameristeel on the Canadian aspects of the acquisition and on the Canadian and US aspects of the financing for the acquisition and the tender offer with a team that includes Karrin Powys-Lybbe (corporate/securities); Jonathan Weisz, Alexandra Kau, Scott Kraag, Jonathan Wiener, Vanessa Kee, Renée Laliberté and Mark Tice (financing); and John Tobin, Peter Keenan and Gregg Larson (tax).

Simpson Thacher & Bartlett LLP represented Gerdau Ameristeel on the US aspects of the acquisition with a team that includes Alan Klein, Todd Crider and Timothy Slavin (M&A); John Creed, Noah Beck and Jason Vollbracht (tax); Brian Robbins, Andrew O'Brien and Jarrett Hoffman (executive compensation); and Joe Tringali and Andrew Lacy (antitrust).

Wachtell, Lipton, Rosen & Katz represented Chaparral Steel with a team that includes Edward Herlihy, Trevor Norwitz, David Adlerstein, Sarah Lewis (corporate); Michael Byowitz, Joseph Larson, Damian Didden (antitrust); Adam Shapiro (executive compensation and benefits); and Robert Friedman (tax).

Hughes Hubbard & Reed LLP represented the arrangers and the lenders for both the bridge loan facility and the term loan facility with a team that includes Amy Dulin, Steven Greene, George Douvas, Flavio Cardoso and Adrian Esguerra (financing); and Andrew Braiterman and Richard Winston (tax).

Greenberg Traurig, LLP represented Gerdau S.A., Gerdau Açominas S.A., Gerdau Açominas Overseas Limited, Gerdau Aços Longos S.A., Gerdau Aços Especiais S.A. and Gerdau Comercial de Aços S.A., as guarantors under both the bridge loan facility and the term loan facility led by Ross Kaufman (corporate).

Shearman & Sterling LLP represented J.P. Morgan Securities Inc. (the dealer manager for Gerdau Ameristeel's tender offer and consent solicitation) with a team that includes Stuart Fleischmann, Hae-Ran Song and Marzio Ciani (capital markets group).