| AggBeat |
September 2007
Tilcon Educates on Aggregates
Tilcon-Delaware, has been traveling to area schools throughout Kent County, Del., to teach kids about the aggregates industry and the potential careers that it offers.
by , Senior Editor
The Dover, Del.-based paving and construction materials supplier is educating the children about the aggregates industry as part of the Science, Math and Technology Alliance in the “What in the World” program.
The program includes grades three through 12 in all schools throughout Delaware, with about 15 to 16 schools participating each year. Tilcon has participated in the program’s Science Alliance for more than seven years.
Children in Delaware schools are learning about
the important role aggregates play in their everyday lives and potential
future careers in the aggregates industry.
“The fact that you’re sparking a child’s interest about the aggregate field or something within it, such as why roads sparkle, is very rewarding,” Tracie Daddio, a Tilcon employee says. “To see that look of awe when they learn something simple about things they normally take for granted is what makes participating in this program so special.”
Asbestos Bill Would Affect Aggregates Operations
A Senate Bill which proposed how to define asbestos has continued to cause unrest in the aggregates industry.
Sen. Patty Murray (D-Wash.) and 16 other democrats introduced S. 742, known as the Ban Asbestos in America Act 2007, in March. The proposed legislation — as currently drafted — may subject some of the raw materials used by the aggregates industry to extremely stringent U.S. Environmental Protection Agency regulations because of how asbestos is defined.
The aggregates industry has been disconcerted because the definition includes non-asbestiform materials mined from rock that may have asbestiform counterparts, although industry sources contend that there is no scientific consensus that indicates non-asbestiform materials have the same negative health impacts as asbestos.
According to an Inside EPA newsletter report, a satisfactory definition was included in a previous version of the legislation that had been incorporated into a larger bill sponsored by Sens. Arlen Specter (R-Pa.) and Patrick Leahy (D-Vt.). The latter would set up an industry-funded trust fund to pay for health complications caused by occupational exposure to asbestos.
If passed, the Murray bill would require the EPA to ban the manufacture, distribution, and importation of asbestos-containing products. National Institute of Health (NIH)-relevant portions of the bill would require the director of the agency to establish an asbestos-related disease research and treatment network. The network would have to include “intramural research initiative” and at least 10 Extramural Asbestos-Related Disease Research Treatment Centers, according to a bill summary on www.billfinder.com.
The bill also would authorize $10 million for each fiscal year 2008 through 2012.
At Aggregates Manager press time, the bill had been referred to the Senate Committee on Environment and Public Works to be marked up prior to Congress’ August recess. However, the Senate was still involved in negotiations concerning aggregates industry concerns.
Rep. Duncan: Truck Safety Needs Improvement
Rep. John J. Duncan (R-Tenn.), ranking Republican of the Highways and Subcommittee, testified that, “despite all the benefits we receive from trucks, work still needs to be done to improve safety” during the Federal Motor Carrier Safety Administration’s July 11 hearing on its oversight of high-risk carriers.
Duncan said that with 5,212 fatalities and 114,000 injuries related to trucks in 2005, truck safety must remain a top priority. “In 2005, there were 2.34 fatal crashes per 100 million miles traveled by trucks,” Duncan testified. “While this rate has improved over the years, the number of fatalities is still too high. It is important that we develop strategies to further reduce this rate.”
Duncan added, “84 percent of all the goods we use and consume get to us by trucks. “A strong trucking industry is essential to our economy.”
Holcim (US) Sponsors Medical Students for Hurricane Katrina Aid Project
Nearly two years after the devastation of Hurricane Katrina, Louisiana and nearby areas hit by the storm are still suffering from the destruction so Holcim (US), in conjunction with the Morehouse School of Medicine (MSM), launched a program to support health care in communities where the company operates.
Morehouse School of Medicine students, sponsored
by Holcim (US), worked through the summer to provide care at Hurricane
Katrina-ravaged clinics.
Six MSM students spent the summer working in medical practices and clinics for low-income patients near Holcim (US) plants.
Holcim (US) sponsored medical students from MSM to work in five locations. The following local Holcim (US) plants helped sponsor the intern: Artesia plant in Mississippi; Holly Hill plant in South Carolina; and the Birmingham and Theodore plants in Alabama. Additionally, at press time, Holcim’s Southeast Region was planning to fund a $25,000 scholarship in Fall 2007.
The company’s employees also worked on rebuilding the rural health clinic Bayou La Batre, which serves low-income residents in the Theodore community. The clinic was destroyed in the hurricane and then burned down the day before it was scheduled to reopen.
Highway funding: $16 billion potential in cuts in 2009
Following the current Bush Administration’s mid-session budget review, the latest estimates forecast that in FY 2009, the Highway Trust Fund (HTF) will have a deficit of more than $4 billion. This is a major increase from the $700 million forecasted in a February budget estimate.
The HTF’s current spending rate will require Congress and the president to find additional revenues to that $4 billion shortfall — or cut highway funding for FY 2009 by about $16 billion, according to a report in the Associated General Contractors of America Highway Facts Bulletin. The cuts in FY 2009 from the promised level of $43.4 billion to about $27 billion would result in a 37-percent reduction in spending on U.S. infrastructure, according to AGC.
The mid-session review, AGC says, also increased the forecasted budget deficit to $9 billion in 2010 and to $15 billion in 2011.
Mergers & Acquisitions
Merger & acquisition announcements and activity increased in the past month, including both small tuck-in acquisitions, as well as larger global transactions. On Aug. 7, following a month of discussions, Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P. (collectively Harbinger) formally commenced its tender offer (through Sept. 7) to acquire all of the outstanding shares of common stock of Oglebay Norton Company (ONCO) for $31 per share in cash. Harbinger, a hedge fund that manages in excess of $12 billion in capital, owns approximately 18.1 percent of the company’s outstanding shares and has been an activist investor with the company for some time. In early July, Harbinger sent a letter to the company’s board stating its intent to nominate certain directors, as well as encourage the company to explore all avenues to maximize shareholder value. ONCO retained an advisor to explore strategic alternatives and also implemented other initiatives to provide some level of independence. However, shortly after its announcement to review alternatives, Harbinger announced its intention to launch the tender offer. The proposed offer represents a premium of approximately 30 percent to the volume-weighted average trading price of the shares during the 30 days prior to the announcement. Based on the proposed offer, the enterprise value for ONCO approximates $580 million, or an approximate 10.5x trailing twelve-month EBITDA multiple.
On Aug. 3, Aggregate Industries PLC (AI) announced the acquisition of Hardaway Concrete Co. Inc. and Hardaway Concrete Company Upstate Inc. (collectively “Hardaway”), a leading supplier of ready-mixed concrete in the Columbia and Greenville, S.C., markets. The acquisition represents a new market territory for the acquisitive AI and its parent, Holcim. Hardaway operates 10 ready-mixed concrete plants, as well as two mobile plants, with a delivery fleet of 82 mixer trucks. In its most recent fiscal year, the company supplied more than 500,000 cubic yards of ready-mixed concrete. Transaction terms and conditions were not disclosed.
On Aug. 1, Florida Rock Industries Inc. (FRK), announced it had closed on the purchase of Freeport Aggregate Ltd., a Bahamian producer of aggregate, ready-mixed concrete, and block. The acquisition has approximately 25 million tons of reserves and should annually produce up to 300,000 tons of aggregates.
The acquisition in the Bahamas follows a mid-July announcement that the U.S. District Court for the Southern District of Florida issued an order requiring FRK (and two other producers) to cease mining operations, at least temporarily, at its Miami-area quarry. FRK has appealed the order. The company hopes to use its Bahamian supply as an import into Florida, but it will not offset the potential loss from the Miami operation. Overall, the legal and environmental responses in Florida illustrate additional rationale for further M&A activity and high multiples in the construction materials industry — a scarce resource potentially restricted by regulations will become more valued and coveted by larger strategic acquirers.
On July 6, MDU Resources Group Inc. (MDU) announced the tuck-in acquisition of Ames Sand & Gravel Inc., a Fargo, N.D.-based producer of ready-mixed concrete. The acquired business produced approximately 90,000 cubic yards of ready-mixed concrete in 2006, generating $7.8 million in revenue. The acquisition further strengthens MDU’s existing presence in the North Dakota market. While financials terms and conditions were not provided, MDU expects the transaction to be accretive.
In other related M&A news, the European Commission approved the acquisition of Hanson plc by HeidelbergCement, thereby leading to the creation of the world’s second largest building materials maker behind Saint-Gobain. In addition, Anglo-American announced its intention to divest Tarmac, its U.K.-based-based provider of aggregates, asphalt, and ready-mixed concrete, either through a sale (more likely) or a de-merger.
— by Bill Watkins, managing director, National City Capital Markets. Watkins is a contributing editor and may be reached at 216-222-7134 or at William.Watkins@NationalCity.com.
