Industrial Holdings and T-3 Announce Planned Merger

Apr 03, 2001, 01:00 ET from Industrial Holdings, Inc.

    HOUSTON, April 3 /PRNewswire/ -- Industrial Holdings, Inc. (Nasdaq: IHII)
 (the "Company" or "IHI") announced today the execution of a non-binding letter
 of intent to re-capitalize the company through a merger with T-3 Energy
 Services, Inc. ("T-3") and an equity infusion by a private equity fund managed
 by First Reserve Corporation ("First Reserve").
     Under terms of the letter, and subject to successful negotiation of a
 definitive agreement, the current shareholders of T-3 will acquire control of
 IHI through a merger of the two companies.  In connection with the merger,
 T-3's largest shareholder, First Reserve Fund VIII, L.P., will contribute an
 estimated $24.6 million of equity to the business (at a price of $1.75 per
 share), and will work with IHI to refinance the combined company's debt into a
 long-term credit facility.  Among other conditions, the transaction is
 contingent upon IHI and T-3 shareholder approval, and customary regulatory
 approvals.  The transaction is scheduled to close in the third quarter of this
 year.
     As a condition to signing the definitive merger agreement, and to improve
 the liquidity of IHI during the approval period, T-3 will purchase IHI
 subsidiary A&B Bolt, Inc. for a cash purchase price of $15.0 million.  Not
 more than $9.0 million of the proceeds will be used to repay secured bank
 indebtedness with the remaining proceeds to be used by IHI for working capital
 purposes.  Upon closing of the merger, T-3's purchase of A&B Bolt will be
 credited toward its $24.6 million equity commitment.  The purchase of A&B Bolt
 by T-3 is expected to close by April 12, 2001, subject to the approval of
 IHI's lenders.
     Commenting on the transaction, Robert Cone, IHI's President and Chief
 Executive Officer stated, "We are extremely pleased to enter into this
 transaction with T-3 and First Reserve.  The merger will allow IHI to continue
 its growth strategy with an improved balance sheet and a strong, recognizable
 energy management team.  The combined company will serve the Gulf of Mexico
 market providing oilfield manufacturing and aftermarket repair services to a
 diverse customer base.  With our improved financial condition, IHI will be
 properly positioned for the current market environment."
     Industrial Holdings operates three groups:  the Energy Group which
 remanufactures and sells high pressure valves, pumps and other related
 products to the petrochemical, chemical and petroleum refining industries, the
 pipeline transportation and storage industries and energy industry; the Stud
 Bolt and Gasket Group which manufactures and distributes stud bolts, nuts,
 gaskets, hoses, fittings and other products primarily to the petrochemical,
 chemical and oil and gas industries; and the Heavy Fabrication Group which
 manufactures and distributes medium and thick-walled pressure vessels, gas
 turbine casings, heat exchangers, wind towers, heat panels and other large
 machined weldments.  For more information, see the company website at:
 www.ihii.com.
     With locations throughout the Gulf of Mexico, T-3 manufactures valves,
 chokes, actuators, and other high pressure, severe service products.  T-3 also
 provides aftermarket remanufacture and repair of blowout preventers, valves
 and manifolds and sells, repairs, and remanufactures a full line of electric
 motors and generators used in both the upstream and downstream segments of the
 energy industry.
     First Reserve Corporation is a private equity fund manager specializing in
 the energy industry with over $1.7 billion under management.  Past, current
 and pending investments include Pride International, National Oilwell,
 Weatherford International, Superior Energy Services, Chicago Bridge and Iron
 and the Dresser Equipment Group.  First Reserve's website can be accessed at:
 www.frcorp.com.
     This news release contains forward-looking statements under the Private
 Securities Litigation Reform Act of 1995.  Although the company believes that
 these statements are based upon reasonable assumptions, the company can give
 no assurance that its expectations will be achieved.  Actual results may
 differ materially due to various risks and uncertainties which are outside the
 control of the company, such as market prices of oil and gas, the volatility
 of such prices, governmental regulation and trade restrictions, worldwide
 economic activity and political stability in major oil producing areas.
 
 

SOURCE Industrial Holdings, Inc.
    HOUSTON, April 3 /PRNewswire/ -- Industrial Holdings, Inc. (Nasdaq: IHII)
 (the "Company" or "IHI") announced today the execution of a non-binding letter
 of intent to re-capitalize the company through a merger with T-3 Energy
 Services, Inc. ("T-3") and an equity infusion by a private equity fund managed
 by First Reserve Corporation ("First Reserve").
     Under terms of the letter, and subject to successful negotiation of a
 definitive agreement, the current shareholders of T-3 will acquire control of
 IHI through a merger of the two companies.  In connection with the merger,
 T-3's largest shareholder, First Reserve Fund VIII, L.P., will contribute an
 estimated $24.6 million of equity to the business (at a price of $1.75 per
 share), and will work with IHI to refinance the combined company's debt into a
 long-term credit facility.  Among other conditions, the transaction is
 contingent upon IHI and T-3 shareholder approval, and customary regulatory
 approvals.  The transaction is scheduled to close in the third quarter of this
 year.
     As a condition to signing the definitive merger agreement, and to improve
 the liquidity of IHI during the approval period, T-3 will purchase IHI
 subsidiary A&B Bolt, Inc. for a cash purchase price of $15.0 million.  Not
 more than $9.0 million of the proceeds will be used to repay secured bank
 indebtedness with the remaining proceeds to be used by IHI for working capital
 purposes.  Upon closing of the merger, T-3's purchase of A&B Bolt will be
 credited toward its $24.6 million equity commitment.  The purchase of A&B Bolt
 by T-3 is expected to close by April 12, 2001, subject to the approval of
 IHI's lenders.
     Commenting on the transaction, Robert Cone, IHI's President and Chief
 Executive Officer stated, "We are extremely pleased to enter into this
 transaction with T-3 and First Reserve.  The merger will allow IHI to continue
 its growth strategy with an improved balance sheet and a strong, recognizable
 energy management team.  The combined company will serve the Gulf of Mexico
 market providing oilfield manufacturing and aftermarket repair services to a
 diverse customer base.  With our improved financial condition, IHI will be
 properly positioned for the current market environment."
     Industrial Holdings operates three groups:  the Energy Group which
 remanufactures and sells high pressure valves, pumps and other related
 products to the petrochemical, chemical and petroleum refining industries, the
 pipeline transportation and storage industries and energy industry; the Stud
 Bolt and Gasket Group which manufactures and distributes stud bolts, nuts,
 gaskets, hoses, fittings and other products primarily to the petrochemical,
 chemical and oil and gas industries; and the Heavy Fabrication Group which
 manufactures and distributes medium and thick-walled pressure vessels, gas
 turbine casings, heat exchangers, wind towers, heat panels and other large
 machined weldments.  For more information, see the company website at:
 www.ihii.com.
     With locations throughout the Gulf of Mexico, T-3 manufactures valves,
 chokes, actuators, and other high pressure, severe service products.  T-3 also
 provides aftermarket remanufacture and repair of blowout preventers, valves
 and manifolds and sells, repairs, and remanufactures a full line of electric
 motors and generators used in both the upstream and downstream segments of the
 energy industry.
     First Reserve Corporation is a private equity fund manager specializing in
 the energy industry with over $1.7 billion under management.  Past, current
 and pending investments include Pride International, National Oilwell,
 Weatherford International, Superior Energy Services, Chicago Bridge and Iron
 and the Dresser Equipment Group.  First Reserve's website can be accessed at:
 www.frcorp.com.
     This news release contains forward-looking statements under the Private
 Securities Litigation Reform Act of 1995.  Although the company believes that
 these statements are based upon reasonable assumptions, the company can give
 no assurance that its expectations will be achieved.  Actual results may
 differ materially due to various risks and uncertainties which are outside the
 control of the company, such as market prices of oil and gas, the volatility
 of such prices, governmental regulation and trade restrictions, worldwide
 economic activity and political stability in major oil producing areas.
 
 SOURCE  Industrial Holdings, Inc.