Steelmaker Sharing Its Good Times
PITTSBURGH (AP) _ Specialty steelmaker Allegheny Ludlum Corp. says it will share its surge of profits with shareholders and employees as it plans for a management change and an acquisition.
″1988 is a year that is unique in the 35 years that I’ve been in specialty steel,″ said Richard Simmons, chairman and chief executive.
Simmons on Thursday announced a special cash dividend of $3.50 per share and a boost in the regular quarterly dividend from 12 cents to 25 cents per share.
With 22.75 million shares outstanding, the moves will cost about $85 million.
The Pittsburgh-based maker of stainless steel sheet and strip and electrical steels also will pay $6 million as a 4 percent discretionary bonus to employees. Further profit sharing payouts are expected through 1990, he said.
Simmons, meanwhile, said he will step down as chief excutive in 18 months and has recommended the board elect Robert P. Bozzone as chief executive until Bazzone’s planned retirement less than five years from now. Simmons, 57, has headed the company since 1972.
Because the exit of Simmons and Bozzone would leave the company with only one officer who has been in place more than two years, Allegheny Ludlum is bringing in Arthur Aronson, Lukens Steel Co. president and chief operating officer, as executive vice president.
The Allegheny Ludlum board also authorized investing $25 million in a leveraged buyout fund that will seek acquisitions of $100 million or less.
Simmons’ son, Brian, 28, is among the general partners of the firm forming the fund. The chairman said he did not participate in the negotiations and the voting on the investment to avoid any conflict of interest.
″We’re particularly sensitive to that issue,″ Simmons said. ″For that reason outside directors have been responsible and have made most of the decisions with regard to this.″
Despite the new spending and a $150 million capital investment plan previously announced, Allegheny Ludlum still will have cash in excess of its debt, Simmons said. Debt totals about $82 million and cash about $90 million.
Allegheny Ludlum reported profits of $85 million, or $3.76 per share, on sales of $913.2 million for the first nine months of the year, compared to profits of $35.5 million, or $1.81 per share, on sales of $632 million in the 1987 period.