Nevada contracting firm sold for $95.8 million

Monday, May 10, 2004 | 10:47 a.m.

SUN STAFF AND WIRE REPORTS

Aggregate Industries, an international building materials group based in London, today announced the purchase of North Las Vegas-based Frehner Construction Company Inc. for $95.8 million in cash, its second acquisition in Nevada.

Frehner, which had sales of $168 million for the year ended Dec. 31, is an aggregates, asphalt and contracting business, with 600 employees and operations in Nevada and Utah. It is the largest contractor for the Nevada Department of Transportation and focuses primarily on government projects.

This purchase follows Aggregate's acquisition of Southern Nevada Paving in November 2003 and further develops Aggregate's sixth U.S. operating region.

Jim Addams, president of Southern Nevada Paving and president of Aggregate's southwest region, today said Aggregate Industries purchased Frehner to own the other half of the 530-acre Sloan Mountain Quarry, which is south of Las Vegas and was jointly owned by Southern Nevada Paving.

"We bought Southern Nevada Paving in November, which gave us a strong presence in the private construction side of things and an undivided one-half interest in Sloan Mountain," said Addams. "With the purchase of Frehner, we get the other half of Sloan Mountain and get a strong presence in the public works side of things."

Nevada was selected as a key market for Aggregate for two reasons, Addams said.

"It's the fastest-growing market in the U.S., which is of interest certainly," he said. "Secondly, most of our operations in the U.S. are in seasonal climates. With Las Vegas, you work 12 months. It will help balance out some cash flow issues with the rest of the country."

Sloan Mountain Quarry has reserves of more than 650 million tons of high quality limestone, Aggregrate said. With the quarry now under the full ownership of Aggregate Industries, there is significant scope for the further development of the asset, the company said. Four independent ready mix concrete plants and two Aggregate Industries asphalt plants are already located at Sloan Mountain.

The company said that the quarry is well placed to increase sales in the fast-growing metropolitan area and in eastern California. Frehner also operates two quarries in Reno and Carson City, with reserves totalling 30 million tons, as well as four permanent and four mobile asphalt plants in Nevada and Utah.

Peter Tom, Group Chief Executive of Aggregate Industries plc, said in a statement: "This acquisition gives Aggregate Industries full ownership of the mineral reserve at Sloan Mountain, creates synergies and strengthens our presence in this high growth area."

"In its first full year, this new region is expected to produce 8 million tons of aggregate and 3 million tons of asphalt and we will continue to expand the business through selective bolt-on acquisitions."

Local management will remain the same other than Frehner's founder, Garth Frehner, will no longer be the chief executive, but will remain with the company as a consultant for a few years, Addams said.

"That was a critical point -- we wanted to be certain that the existing management would stay in place other than the owner," he said.