Hirsch & Co. No dealer, salesman, or any other person has been authorized to give any information or to make any representations, other than those contained in this Prospectus, in connection with the offering contained in this Prospectus, and information or representations not herein contained if given or made, must not be relied upon as having been authorized. This Prospectus does not constitute an offering by the Underwriter in any State to any person to whom it is unlawful for the Underwriter to make such offer in such State. The date of issue of this Prospectus is April 26, 1946. The Buffalo Plant of Colorado, formerly a Wickwire property, has an annual steel ingot capacity of 180,000 net tons. The steel ingots produced there are used solely in making the wide variety of wire products and other specialty items and end-use products which are produced by the Colorado plants which were formerly part of Wickwire. These specialty items are sold by square footage, yardage, pounds, pieces, tonnage, and other measures. The open hearth production rates as related to capacity of the Buffalo Plant for the years 1937 through 1945 are as follows: This production constitutes less than 4 of 1% of the reported total industry production. Property WESTERN PROPERTIES The principal property of Colorado consists of the Minnequa Steel Works, located at Pueblo, Colorado, which comprises approximately 583 acres of land, upon which are located blast furnaces, open hearth furnaces, and rail, structural, merchant, rod, wire, and other mills, a pipe foundry, a byproduct coke plant, a benzol plant, and various other departments and operations. The annual steel ingot capacity of the Minnequa Steel Works is approximately 1,272,000 net tons, and the mill capacity for rolling, drawing and finishing exceeds this ingot capacity. Colorado owns a number of coal mines equipped for operation, and six of these, the Morley, Frederick, Robinson No. 4, Kebler No. 2, Rockvale No. 3, and Crested Butte, are now being actively operated. These are all located in the State of Colorado, and furnish coal for the Minnequa Steel Works, as well as approximately 477,365 tons annualy, for sale for domestic and industrial purposes. In addition, large acreages are held in reserve for coking and non-coking coal in Colorado and Wyoming. Colorado has proven reserves of coal and iron ore sufficient to last for a period of twenty or more years, at the rate of use prevailing in 1945. Transportation from the principal mines to the Minnequa Steel Works is provided by various railroads and, for a short distance, by the wholly owned subsidiary of Colorado, The Colorado & Wyoming Railway Company. Distances from Colorado's coal mines to the Minnequa Steel Plant are approximately as follows: Crested Butte, Colo------ 201.6 miles | Rockvale No. 3, Colo‒‒‒‒‒‒ 46 miles Robinson No. 4, Colo-----. 54.5 miles 104.6 miles 105.8 miles 164.6 miles The principal sources of iron ore are from the Colorado's two mines, the Sunrise Mine located at Sunrise, Wyoming, and the Duncan Mine in Iron County, Utah. The former comprises approximately 1,933 acres, the latter 935 acres in area. In addition, Colorado presently operates two dolomite and limestone quarries and one fluorspar quarry, for the purpose of supplying the steel works. The approximate distances from iron ore mines and limestone quarry to the Minnequa Steel Plant are as follows: Sunrise, Wyoming_ Iron Mt., Utah-- Limestone-Monarch, Colo‒‒‒‒‒ (375.1 miles 427.8 miles 833.2 miles 120.7 miles Some 45% of the scrap metal which is used in the production of steel is obtained for the Minnequa Steel Plant from the waste material accumulated in blooming billets and in other further handling of Colorado's products. This material is called "developed scrap," and is, of course, returned to the open hearth to be melted again. The remaining 55% of scrap is purchased. Of this amount some 35 to 50% is obtained from the railroads and the remainder from various dealers in both the urban and agricultural communities surrounding the Minnequa Steel Plant. This territory is considered semiabundant territory. The availablity of scrap varies. It is constantly fluctuating and the distance from which scrap must be obtained likewise must vary with the availability of supply. However, there are at present no indications that there will be a material reduction in scrap supply, insofar as the requirements of either the Minnequa or Buffalo Plants are concerned. In general, Colorado at present owns or has rights to approximately 406,600 acres of land, roughly divided as follows: 1 The coal and/or mineral rights and oil and gas rights referred to in the tabulation above are generally perpetual, and were obtained by reservation on behalf of Colorado when the surface of these lands was sold. No statement can be made as to the value of these rights since the value of the lands subject to said rights is almost entirely unproven and unknown, in respect to oil, coal or other minerals. THIRTIETH ANNUAL REPORT WHEELING STEEL, FISCAL YEAR ENDED DECEMBER 31, 1949 Wheeling Steel Corporation and Subsidiary Companies, Wheeling, West Virginia PROPERTIES AND CONSTRUCTION.—The improvement and modernization program, commendced in 1947, comprising the construction of a new battery of coke ovens and auxiliary equipment, improvements to blast furnaces at SteubenvilleSouth Works and the installation of a new continuous tube mill at the Benwood Plant was practically completed during 1949. The new coke ovens and two blast furnaces were placed in operation during the last half of 1948 and the new tube mill was placed in operation in April 1949. All of these units, although handicapped by strikes and the shortage of materials caused thereby, have been and presently are operating in a satisfactory manner. The original program, estimated in 1946 to cost $30,000,000, was modified in some respects to achieve maximum results upon completion and because of such modification increased wages and material prices the actual cost of completing the program was about $40,000,000, the amount expended thereon in 1949 having been $8,100,000. The Corporation is now self-contained insofar as steel requirements are concerned as the ingot capacity of the Steubenville Plant has been substantially increased by the utilization of improved facilities and operating methods. In addition to the expenditures made during 1949, in connection with the above-mentioned improvement and modernization program, an amount of $6.100,000 was expended for equipment, facilities and improvements to other plants. The most important items included in that amount were (a) the completion of the construction of a coke oven gas transmission line from SteubenvilleSouth Works to Yorkville Plant, mentioned in detail in last year's report; (b) the Corporation's proportion of the cost of reconditioning the third blast furnace at Steubenville-South Works; (c) rebuilding and improvement to the continuous pickler line, relining No. 2 blast furnace and rebuilding of the mold yard runway at the Steubenville Plant; and (d) the construction of a new warehouse at Richmond, Virginia, for the use of Wheeling Corrugating Company, a wholly owned subsidiary. Tin plate is one of the principal products of the Corporation. In 1942 one electro-tinning unit was installed at the Yorkville Plant for the purpose of producing electrolytically coated tin plate. Increasing demand by our principal tin plate customers for a product produced by this process and the present indications that such demand will increase appreciably in the future with a corresponding reduction in the demand for tin plate produced by the hot dipped method, makes it imperative that an additional electro-tinning unit be provided. This installation will be started immediately so that the new unit will be in production early in 1951 and is estimated to cost between $3,000,000 and $4,000,000 including auxiliaries. This will place the Corporation in a position to adequately serve its tin plate customers. While the Corporation will be required to spend other sums of money upon ordinary capital improvements, no other major construction program is contemplated for this year. Late in 1949 the Corporation, together with four other steel companies, joined with Hollinger Consolidated Gold Mines, Ltd., Hanna Coal and Ore Corporation and two existing concession companies in the formation of the Iron Ore Company of Canada for the purpose of further financing the development of iron-ore deposits in Labrador. Under the terms of the agreement the Corporation does not have a substantial liability with respect to its participation during the next two years and can withdraw from the company at any time prior to December 31, 1951. If the development of the ore body proceeds as presently indicated, the Corporation will be assured of a large quantity of high grade iron ore in future years. It was stated in last year's annual report that the third blast furnace at Steubenville-South Works, the production from which was not presently needed by the Corporation, had been leased to a nonaffiliated corporation and was being reconditioned by that corporation with a view of placing it in production in July 1949. Before that date, however, an adequate supply of pig iron became available resulting in that corporation's requirements being fulfilled without the production of this blast furnace. The lease was canceled and the blast furnace is now being held by the Corporation as a stand-by facility. The rated annual ingot capacity of the Corporation as of January 1, 1950, has been increased from 1,536,000 net tons to 1,656,000 net tons because of the increased use of hot metal, the introduction of the use of oxygen and other technological improvements at the open hearth plant. It is anticipated that the ingot capacity will be further increased during 1950 upon completion of other technological improvements which are presently being made. LONG-TERM DEBT.—In accordance with the provisions of the First Mortgage, sinking fund installments, requiring the redemption of $250,000 principal amount of First Mortgage Sinking Fund 34% Bonds, Series C, due March 1, 1970, and $400,000 principal amount of First Mortgage Sinking Fund 34% Bonds, Series D, due July 1, 1967, were satisfied on March 1, 1949, and July 1, 1949, respectively, when bonds in the principal amounts above stated, previously acquired by the Corporation, were delivered to the Trustee for cancellation. In anticipation of future sinking-fund requirements $250,000 principal amount of Series C Bonds and $313,000 principal amout of Series D Bonds were acquired in the open market and were held in the Treasury at the end of the year. CAPITAL STOCK.-During 1949 dividends on the $5 Cumulative Prior Preferred Stock were paid in the amount of $5 per share, aggregating $1,815,830, and dividends in the amount of $4 per share, aggregating $2,278,236, were paid upon the Common Stock, making a total of $4,094,066, provided out of 1949 earnings. The provisions of the Corporation's First Mortgage, as amended, restrict payments of dividends as set forth on page 14 of this report. As of December 31, 1949, $28,871,866 of the surplus of the Corporation was free of such restrictions. That amount includes surplus earnings of the Corporation subsequent to December 31, 1946, remaining unapplied to the extent of $23,871.866. With a view to obtaining a wider distribution of the Common Stock, without par value, of the Corporation and to improving the marketability of the shares of such stock, the Board of Directors on February 22, 1950, declared advisable, subject to approval by the stockholders, amendments to the Certificate of Incorporation to increase the authorized number of shares of Common Stock of the Corporation from 1,100,000 to 2,500,000 and to split each of the presently outstanding 569,559 shares of such stock into two shares. If the proposed split-up is authorized, stock certificates for one additional share of Common Stock for each share held on the date * * 1,025,000 SHARES PORTSMOUTH STEEL CORPORATION COMMON STOCK, PAR VALUE $1 PER SHARE THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION These Securities Are Offered as a Speculation Portsmouth Steel Corporation has registered the securities by filing certain information with the Commission. The Commission has not passed on the merits of any securities registered with it. IT IS A CRIMINAL OFFENSE TO REPRESENT THAT THE COMMISSION HAS APPROVED THESE SECURITIES OR HAS MADE ANY FINDING THAT THE STATEMENTS IN THIS PROSPECTUS OR IN THE REGISTRATION STATEMENT ARE CORRECT 1 Attention is directed to the provision for indemnification of the Underwriters by the Corporation set forth under "Underwriting" herein. Kaiser-Frazer Corporation and Graham-Paige Motors Corporation have agreed to purchase an aggregate of 300,000 additional shares directly from the Corporation at $10 a share in cash upon the acquisition of the Portsmouth Works as described herein and the receipt by the Corporation of the net proceeds from the sale of the 1,025,000 shares. Kaiser-Frazer Corporation and Graham Paige Motors Corporation are to grant an option to Cyrus S. Eaton or his nominee or nominees to purchase within one year thereafter not to exceed 250,000 of such 300,000 shares, at $10 per share. Mr. Eaton and members of his family own the controlling stock interest of Otis & Co., and Mr. Eaton is Chairman of the Board of Directors of the Corporation. See "Promoters. Parent and Share Ownership" herein. Cyrus S. Eaton has agreed that immediately following the public offering he and his associates, directly or indirectly, will be the owners of not less than 50,000 of the shares purchased from the Corporation at $8.90 per share. Before deduction of expenses payable by the Corporation, estimated at $47,025. The Common Stock is offered subject to prior sale and when, as and if issued and accepted by the Underwriters, and subject to the approval of legal details by Messrs. Jones, Day, Cockley & Reavis, counsel for the Corporation, and Messrs. |