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owned 58 percent and Zalman Melnik owned 42 percent of the 20,000
issued and outstanding HouTex shares.
HouTex Sale Negotiations and Annuity Agreement Discussions
During the 1980s, Moshe Melnik approached a company called
Commercial Metals about the possibility of selling HouTex.
Commercial Metals was not interested, however, in operating a
scrap metal business.
In the 1990s, an individual named Larry White proposed a $2
million purchase price for HouTex. The Melniks rejected the
proposal when they learned that a large portion of the purchase
price would be paid in promissory notes.
After his 1996 divorce, Moshe Melnik again considered
selling HouTex and getting out of the scrap metal business.
Sometime in 1996, Moshe Melnik attended a scrap dealer convention
in Las Vegas, where he heard about companies that were “rolling
up” small scrap metal companies into larger, publicly traded
companies. After the convention, on a date that does not appear
in the record, Ben Jennings, the chairman of the board of
directors and chief development officer for Metal Management,
Inc. (MMI), contacted Moshe Melnik. MMI was engaged in the
business of dismantling, processing, marketing, brokering, and
recycling both ferrous and nonferrous metals. After preliminary
discussions, on a date that does not appear in the record, Mr.
Jennings came to Houston to evaluate HouTex, and initially he
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