Since it was first listed in May of this year, Global Stone (TSE) has more than met its growth objective in the industrial minerals and construction aggregate sector.
The company raised $27.9 million in May by issuing 9.2 million units at $3 each. The units included one share plus half a share purchase warrant, with each whole warrant giving the holder the right to buy an additional share at $3 to May 31, 1995.
Global used the initial placement to cover the purchase of the Chemical Lime Works and Quarry at Ingersoll, Ont.
The company bought Chemical Lime from Stelco on Oct. 20, 1992, for about $22 million.
Cominco (TSE) provided $23 million to fund the purchase and was reimbursed with proceeds from the initial public offering.
Although Cominco has the right to participate with a 50% working interest in any of Global Stone’s acquisitions, it declined to exercise the option in the Stelco purchase.
The Chemical Lime Works property contains extensive, high-grade limestone deposits. The existing quarry and plant have been used continuously by Stelco for 33 years to produce lime for use in Stelco’s steel plants. Stelco is the quarry’s major customer. As part of the sale agreement, it must buy the bulk of its lime and limestone requirements for its three principal steel plants from Global Stone for up to 12 years.
Operating profit for the nine months ended June 30 (before financing costs and taxes) amounted to $2.62 million on sales of $12.21 million. However, operating profits from the operation accrued to Cominco until its loan was repaid. As a result, Global reported a net profit of $13,000 for the 9-month period and $372,000 for the third quarter.
Global Stone recently launched a second purchase by acquiring the Tenn Luttrell Company, based in Knoxville, Tenn. (Cominco does not intend to participate in the purchase.)
Tenn Luttrell reported revenue of US$16.6 million in 1992 on the sale of about 250,000 tons of lime and 500,000 tons of limestone aggregate. The company’s current proven and probable reserves are more than 60 million tons, sufficient for more than 40 years of working life at current extraction rates.
Global will pay US$24.15 million for the acquisition, subject to final adjustment for working capital.
Funding for the purchase has been arranged through the sale of 6.32 million special warrants at $4.75 each to a group of underwriters.
The special warrants will be convertible into one share of the company at no additional cost, following regulatory approval.
The special warrant issue boosts the company’s outstanding shares to about 19.1 million, or about 23.7 million with the exercise of the outstanding warrants.
Cominco owns 1.34 million shares of Global Stone and says it is still committed to the company and to future joint ventures.
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