NEW YORK Sims Metal Management Ltd. has sold two scrap metal recycling operations in Arizona to SA Recycling LLC, the company announced over the weekend.
SA Recycling is an equally owned joint venture between Sims and Adams Steel LLC with operations in California, Nevada and Arizona.
Sims sold "the real property related assets" for the two scrap recycling facilities, located in Phoenix and Tucson, to SA Recycling for $35 million in cash but will retain the working capital assets of its Arizona business, estimated at $15 million. This brings the total expected cash generation from the Arizona sale to $50 million.
"The sale of our Arizona assets ... is part of our aggressive repositioning of our shareholders precious capital to markets that offer the highest returns on invested capital and meet the long-term strategic growth plans we have for the important North American market," Sims chief executive officer Daniel W. Dienst said in a statement, noting that the deal follows the companys recent dispositions of assets in Colorado, a joint-venture interest in Nashville, Tenn. (amm.com, Oct. 1), and the acquisition of assets and businesses in Alabama (amm.com, Aug. 23) and Maryland (amm.com, Sept. 5) over the past few months.
"The transaction also resolves issues related to the SA Recycling joint-venture agreement which granted Arizona as a territory to SA Recycling, allowing us to operate but to not otherwise expand in Arizona. We are pleased to have resolved this issue, while at the same time allowing our important joint-venture partner in the Southwestern U.S. to expand," he added.
The deal enables SA Recycling to expand the reach of its Southern California base further into Arizona, "and aligns our existing Arizona facility as a feeder yard to the shredder we acquired in this transaction," SA Recycling chief executive officer George Adams said, noting that the transaction also allows the acquired facilities to realize freight efficiencies and better access to export markets through the companys docks in Southern California.