Gerdau Climbs Value Chain

Mario Longhi, president and CEO of Gerdau Ameristeel, notes the acquisition is consistent with Gerdau Ameristeel’s strategy to further diversify its product offering into high value added steel products, and believes the deal will generate annual pre-tax operating synergies in excess of $55m by the end of 2008. Also, the equity offering is expected to dilute 2007 and 2008 EPS. Moody’s and Fitch put Gerdau and Gerdau Ameristeel on review for downgrade yesterday noting that the deal could significantly increase Ameristeel’s leverage. “Were Ameristeel’s Debt/EBITDA to increase beyond 3.0x, its ratings could be downgraded multiple notches,” Moody’s noted.