Metals USA to continue using pay-in-kind option on floaters due 2012

By Jennifer Lanning Drey

Portland, Ore., Feb. 2 - Metals USA Inc. plans to continue using the pay-in-kind interest payment option on its senior floating rate toggle notes due 2012 for the foreseeable future, Robert McPherson, chief financial officer of Metals USA, said Monday during the company's fourth-quarter earnings conference call.

McPherson also said the company's $160 million draw under its ABL credit facility made in September remains outstanding as Metals USA plans to wait until it has more confidence in commercial banking before repaying the amount.

Metals USA ended the fourth quarter on Dec. 31 with $368 million drawn under the ABL facility and excess availability of $71 million.

The company had total liquidity of $238 million, which included $167 million of cash.

Net debt stood at $777 million at the end of 2008 and was $67 million lower than net debt of $844 million at the end of the prior year due primarily to strong earnings in 2008.

The company posted record fourth-quarter net sales of $456.4 million, up $24.2 million from $432.2 million in the fourth quarter of 2007.

EBITDA for the quarter was $12.8 million, a $13.6 million decrease from the $26.4 million recorded in the fourth quarter of 2007. The 2008 results included a pre-tax $6.8 million write-down for inventory lower of cost or market adjustments in the metals service center segments.

Net cash provided by operating activities during 2008 was $73 million.

Metals USA is a Houston-based metals processor and distributor.

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