Steel Chemicals Company - Falcon Investment Advisors

Steel Chemicals Company

Acquisition of an unprofitable division of a corporate parent

Business Description:

The Company produces electrode grade and pin stock grade petroleum needle coke, a key ingredient for the production of steel through the electric arc furnace method.

Falcon Solution:

The business had been operated as a non-core division of major oil company and was not profitable at the time. Falcon supported an industry insider who recognized the intrinsic value of the Company’s assets as well as the industry’s developing supply/demand dynamics. Falcon invested in subordinated secured notes with warrants and membership units in its role as sole institutional investor and significant minority equity holder.

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Investment Date:

APR 2005

Transaction Type:

Growth

Industry:

Chemical/Steel

Sponsor:

Company and entrepreneur

Securities:

Subordinated secured notes with warrants and membership units

Exit Date:

Debt repaid in April 2007, and equity position acquired by a strategic investor in June 2008