Moving Metal

he would exhaust “all the money-raising schemes we can pick out of the woodwork.” Reliance was now confronted with a difficult choice: put the brakes on growth, go public, or raise more debt. Slowing the growth rate of the metals service center business conflicted with Gimbel’s “grow or go” philosophy—that was out of the question. But Gimbel also worried that if Reliance went public it would be at the sacrifice of privacy and some measure of control. Additionally, Gimbel worried that the metals service center industry was not adequately appreciated by inves- tors and so a public offering would not generate sufficiently high share prices. There was little to do but keep borrowing. Gimbel and his fellow executives subsequently spent seventy to eighty percent of their time meeting bankers “with our hat in our hands,” but no new credit was forthcoming. Then, during a business trip, Gimbel struck up a con- versation with a fellow airline passenger, who turned out to be an executive with Bateman Eichler Hill Richards, one of the largest regional securities and financial man- agement firms in the western United States at the time. Gimbel chatted idly about Reliance during the flight, and was surprised when the man finally handed him his business card and said, “If you ever need any money, you should call me.” With the Board’s approval, Gimbel called his new contact at Bateman Eichler and negotiated a $7.5 million, 15-year loan from four insurance companies. Reliance got the loan, paid it off well ahead of schedule, negotiated and repaid another, and then another. Before long, the company was able to obtain private loans of more than $20 million to fuel its acquisitions and expansions. The thought that insurance companies might be viable alternatives to private capital had never entered Gimbel’s mind before his encounter with

Joe Crider, left, leads a plant tour. A vetern of Drake Steel, Crider turned around the Fresno and Santa Clara operations before taking over the flagship operation in 1971.

subsidiary—an enterprise wholly- or majority-owned by Reliance that operates as a free-standing company. Gimbel believed that SupraCote was “a natural candidate” for an eventual spin-off, but as of yet it remained under the corpo- rate umbrella. NEW FUNDING, NEW LEADER Establishing SupraCote was a step in a new direction, but it did not relieve the persistent corporate cash crunch. The financial situation was worsened by an economic slump in 1973 which made securing working capital more difficult. Tra- ditionally, Reliance relied on bank loans to get through tough times, but now it was evident that Reliance would have to double its present $10 million debt and increase equity from $13 million to $34 million. Not surprisingly, Gimbel devel- oped a “gnawing fear” that at some point in the near future

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