WISCO WRCA CO. Ltd. to Build World’s Largest Wire Rope Plant to Supply Product for China and Other Asian Markets
New York, NY (July 11, 2006) -- KPS Special Situations Funds (“KPS”) announced today that its portfolio company, Wire Rope Corporation of America, Inc. (“WRCA”), has formed a joint venture with Wuhan Iron and Steel Corporation (“WISCO”), China’s third-largest steel producer and the 18th largest in the world, to produce wire rope in China for the Asian markets. The joint venture, which will operate under the name WISCO WRCA CO. Ltd. (“WISCO WRCA”), is 51%-owned by WRCA and 49% by WISCO.
WISCO WRCA will build the most modern wire rope production facility in the world at a highly developed industrial location in Wuhan, China, located west of Shanghai on the Yangtze River. WISCO, which is located within close proximity of the new rope mill, will be the primary supplier of rod to the joint venture. The one million square foot facility will be capable of producing 50,000 metric tons of wire rope products once all of the equipment is installed. The state-of-the-art facility will have more than 75 major pieces of manufacturing equipment and has been designed with optimum logistics flow and expansion capabilities that would bring total output up to over 100,000 tons at the site by 2010.
Total investment in the new venture will be approximately $100 million. Construction of the new plant is expected to start in August and be substantially completed in 2007, with some specialty installations continuing into 2008. The plant is expected to employ more than 400 people.
David Shapiro, Managing Principal of KPS, said, “KPS is proud of WRCA’s transformation into a successful company with a global footprint and a leadership position in its industry. In the three years since KPS created the new company to acquire the assets of WRCA’s predecessor, the company has completed a stunning turnaround. The company has made extraordinary operational improvements in the North American business and completed the acquisition and integration of Aceros Camesa of Mexico, which made WRCA the largest producer of wire rope in the Western Hemisphere. WRCA has now taken the next logical step in its development by forming this joint venture in the critical China market in partnership with WISCO, one of the world’s outstanding steel providers. We look forward to working with the WRCA management team to further build the value of the business through the success of this new joint venture and other growth initiatives.”
Ira Glazer, CEO of WRCA, said, “The formation of this new joint venture with WISCO is a great opportunity for WRCA. While the total wire rope market in China is 2.5 times the size of the U.S. market and there are numerous wire rope manufacturers there, the majority of the product is of relatively low quality. Further, there is a significant quantity of wire rope being imported into China, and the amount is expected to increase in the future. The joint venture will benefit from the lower costs of operations in China and the high quality rod supply from WISCO. We will add our technical expertise to the favorable cost environment in order to produce a very competitive product for the local Chinese and broader Asian markets. We believe there is great demand for a higher quality product which should enable us to sell out our capacity and eventually expand.
About Wire Rope Corporation of America, Inc.
Wire Rope Corporation of America, Inc. based in St. Joseph, Missouri, is the largest manufacturer of wire rope in the Western Hemisphere. Through domestic and global manufacturing, it distributes wire rope and fabricated products worldwide. WRCA is the only major wire rope manufacturer in the world to be API certified, QPL Qualified, and ISO-9001:2000 registered. The company operates seven manufacturing facilities in the United States and Mexico and has more than 1,400 employees.
About KPS Capital Partners
KPS, through its affiliated management entities, is the manager of the KPS Special Situations Funds, a family of investment funds with approximately $21.8 billion of assets under management (as of June 30, 2024). For over three decades, the Partners of KPS have worked exclusively to realize significant capital appreciation by making controlling equity investments in manufacturing and industrial companies across a diverse array of industries, including basic materials, branded consumer, healthcare and luxury products, automotive parts, capital equipment and general manufacturing. KPS creates value for its investors by working constructively with talented management teams to make businesses better, and generates investment returns by structurally improving the strategic position, competitiveness and profitability of its portfolio companies, rather than primarily relying on financial leverage. The KPS Funds’ portfolio companies generate aggregate annual revenues of approximately $21.6 billion, operate 245 manufacturing facilities in 26 countries, and have approximately 64,000 employees, directly and through joint ventures worldwide (as of June 30, 2024, pro forma for the recent acquisitions of Sport Group and Innomotics which closed on July 8, 2024 and October 1, 2024, respectively). The KPS investment strategy and portfolio companies are described in detail at www.kpsfund.com.
