Harsco to Sell Infrastructure Unit in JV with Clayton, Will Receive $300M in Cash

Diversified globalindustrial company Harsco Corporation (NYSE: HSC) today announced an agreementto sell Harsco's Infrastructure division into a joint venture with Clayton,Dubilier & Rice ("CD&R") under a transaction that will combine theInfrastructure division with Brand Energy & Infrastructure Services, Inc.("Brand"), which CD&R is simultaneously acquiring from First Reserve. Thecombined company, which will continue under the name Brand Energy &Infrastructure Services, will be a leading, single-source provider ofspecialized industrial services to the worldwide energy and infrastructuresectors. Upon closing of the transaction, Harsco will receive cash proceeds ofapproximately $300 million and a 29 percent equity stake in the combinedcompany, which has an enterprise value of approximately $2.5 billion."This transaction is the first major step in the strategic transformation ofHarsco," said Patrick Decker, Harsco President and Chief ExecutiveOfficer. "It follows a period of extensive consideration and offers a numberof compelling benefits to our shareholders. First, it immediately strengthensthe financial profile of the Company while providing the financial flexibilityto pursue higher return, higher growth opportunities. Second, it reduces thecomplexity of our business, consistent with our objectives for internalsimplification and greater operating efficiency. Third, by maintaining anequity position in a stronger and more profitable combined business, Harscostands to benefit from the additional value that will be created by the newventure."Transaction Benefits to Harsco•   Strengthens Harsco's financial profile. Immediately upon the close of thetransaction, Harsco will receive approximately $300 million in cash, whichwill significantly strengthen the Company's balance sheet and enable theCompany to reallocate capital to higher-return opportunities. On a pro formabasis, Harsco expects the transaction to improve margins, be immediatelyaccretive to earnings in the first year after close and improve the Company'sreturn on capital.•   Positions Harsco to pursue opportunities with attractive return and growthprofiles. Harsco believes there are a number of organic growth and bolt-onacquisition opportunities to create differential value and generate improvedreturns and growth.•   Reduces the complexity of the Harsco portfolio.  This transaction isaligned with Harsco's stated objectives to generate more attractive returnsand improve the underlying performance of its businesses, particularly itsMetals & Minerals segment. Under its ongoing Simplification initiative, Harscois streamlining its operational structure and processes to improve internalexecution and efficiency. Going forward, Harsco expects to reduce its overheadcost profile commensurate with its reduced complexity and simplifiedstructure.•   Creates the opportunity for additional value creation. Harsco will benefitfrom its equity position in a stronger and larger business with a morediversified portfolio of services and offerings. The New Brand Energy & Infrastructure ServicesPro forma 2013 annual revenues for the combined company are estimated atnearly $3 billion and EBITDA margin is expected to be in the low doubledigits. Approximately two-thirds of the combined company's revenues areexpected to be generated from the energy sector, with a significant level ofrecurring revenue driven by required maintenance work.