Nice catch on FRD. I thought this part of the preannouncement a few weeks ago was also interesting. FRD getting in bed with STLD (which has an almost $13 Billion market cap). If STLD wants to make a small acquisition, seems they don't have to look very far...
From the 5/25/21 PR-
NEW FACILITY PLANNED FOR SINTON, TEXAS UPGRADES PRODUCT PORTFOLIO AND ENABLES COMPANY TO SERVE BROADER CUSTOMER BASE
The Company is excited to announce plans for a new facility in Sinton, Texas, which is expected to be well positioned to capture additional demand growth with an expanded portfolio and geographic advantages. Steel Dynamics, Inc. (“SDI”) has invited Friedman Industries to locate the new facility on the campus of its new flat roll steel mill currently under construction in Sinton, Texas. SDI’s Sinton mill will be the most advanced electric arc furnace mini mill in the world and will have an estimated annual capacity of 3 million tons with capabilities of producing flat roll up to 1” thick and 84” wide at 100,000 psi yield.
Friedman Industries’ Sinton location will consist of an approximately 70,000 square foot building located on approximately 25 acres leased from SDI under a 99-year agreement. The Company has selected Red Bud Industries to build one of the world’s largest stretcher leveler cut-to-length lines, capable of handling material up to 1” thick, widths up to 96” and yields exceeding 100,000 psi.
“This facility will expand the size range and grades of materials we can deliver to our coil segment customers, while extending our competitive footprint to better serve customers in the Southwest United States and Mexico,” commented Taylor. “The strategic co-location with SDI will enable us to capture freight efficiencies that will enhance our competitiveness and reduce our environmental footprint. We believe this modest strategic investment will create significant long-term value for our shareholders, enabling Friedman to both better serve existing customers and capture new opportunities in a region that is seeing significant long-term business investment. We would like to thank the SDI team for this opportunity and look forward to the potential this investment creates for Friedman Industries and its shareholders.”
The Company expects the location to commence operations in April 2022, and estimates the total cost of the project to be $21 million. On May 19, 2021, Friedman Industries signed a credit agreement and related documents with JPMorgan Chase Bank N.A. for a $40 million 5-year asset-based revolving line of credit facility (“ABL Facility”). The Company expects to fund the Sinton capital expenditure through a combination of cash generated from operations and funds drawn under the ABL Facility. More information about the ABL Facility can be found in the Company’s Form 8-K filed with the SEC on May 25, 2021.
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