Latrobe Steel, a fixture in Latrobe, Westmoreland County, for more than nine decades was sold Friday by Timken Co. for $215 million to two private investment firms. The transaction, which forms the "new" Latrobe Specialty Steel Co., results in no job losses or restructuring of specialty steel operations and could result in increased employment, company President Hans J. Sack said. "We are doing very well. We are now operating at capacity, so we need all hands on board," Sack said. "There will be no impact on employment, no layoffs, no reorganization." Some $35 million in primarily pension liabilities are being assumed by the new owners. Founded in 1913, Latrobe Specialty Steel manufacturers and distributes more than 300 grades of specialty steel for the aerospace, high-speed and tool-and-die industries. Facilities include the main plant in Latrobe, which Sack said employs about 600, plus smaller facilities in Franklin, Pa., and Wauseon, Ohio, distribution centers in Marlborough, Mass., Vienna, Ohio, and White House, Tenn., and warehouses in Chicago and Detroit. Total employment is about 900. The new owners include private equity firm The Watermill Group of Lexington, Mass., and family-owned private investment firm Hicks Holdings LLC of Dallas, led by legendary investor Tom Hicks. "Watermill had been working on a deal for Latrobe Specialty for about a year, ever since Timken said it was exploring strategic opportunities for Latrobe," said Hicks spokesman Roy Winnick. "They asked us to get involved." Hicks is putting $16 million in equity into the deal and will own 51 percent of the company. Watermill is putting $15 million in equity in and will own 49 percent, according to Winnick. "Sankaty (Advisors LLC) is providing $30 million in mezzanine (temporary) financing, and the balance of the $215 million is debt provided by PNC (Financial of Pittsburgh)," Winnick said. "We're confident the new owners will add something positive to the mix, and we hope to add personnel," Sack said. "I don't look at this as a negative at all," said Larry Larese, executive director of the Westmoreland County Industrial Development Corp. "Being acquired by an investment group creates the opportunity that they may expand. I think the investment group saw an opportunity to grow the business based on the strength of their contracts." Winnick said the new owners expect Latrobe Specialty this year to provide $80 million in profits before interest, taxes and depreciation, and expect strong growth to continue. "Watermill is excited by this latest investment," said Steven E. Karol, founder and managing partner of The Watermill Group, in a statement. Canton, Ohio-based Timken acquired Latrobe Specialty in 1975 and has been looking to sell the company for a while, Sack said, although the former parent didn't scrimp when it came to modernizing what was determined to be a non-core asset. "A couple years ago, Timken modernized the plant's continuous rolling mill for about $22 million, so they were very good about keeping us competitive," Sack said. "The significant investments that Timken made in the rolling mill a few years ago is what made the firm successful and profitable and they (the buyers) saw an opportunity to make money," said John Skiavo, president and CEO of the Economic Growth Connection of Westmoreland County. The company is being acquired at a good time, according to Sack. Timken said the company's 2005 sales totaled $345 million, or about 6.5 percent of the former parent's $5.2 billion in sales. Through the first nine months of this year, Latrobe Specialty contributed $266 million in sales, and $42 million in earnings before interest and taxes.

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