Services of America Inc. (ISA) has entered into an agreement to
be managed by a private equity firm in an effort to turn the
The Louisville, Ky.-based scrap
processor has signed a one-year agreement with Blue Equity LLC,
which is run by scrap metal veteran Jonathan Blue.
Blue Equity will work with
ISAs existing management to review operations and
identify opportunities for growth to help the company improve
its core business, secure strategic alliances and diversify its
holdings in the domestic and international markets.
Louisville-based Blue Equity has
purchased 125,000 shares of ISAs common stock at $4 per
sharea premium to the stocks April 1 opening at
$3.38 per shareand has an option to pick up a total of
1.5 million shares at $5 per share.
Blue, the private equity
firms chairman and managing director, began his career in
the scrap metal recycling industry, working at family-owned
Louisville Scrap Material Co., which was sold to Caterpillar
Inc.s Progress Rail Services Corp. in 1998.
"Blue Equitys business
philosophies and practices have successfully transcended a
diverse range of industries and now it seems we have come full
circle, returning with this transaction to the scrap and
recycling businesses," Blue said in a statement.
ISA founder and chief executive
officer Harry Kletter told AMM that the partnering is
part of his exit strategy, which is set to take place in May
amm.com, Jan. 18). Kletter said that privately
held recycling companies, including ISA, are struggling. ISA
last turned a profit, just $8,531, in the first quarter of 2012
on $60.6 million in sales (
amm.com, May 9).
ISA president and chief
operating officer Brian Donaghy said he will work closely with
Blue Equitys portfolio
includes investments in an array of sectors from oil and gas to
real estate to financial services.
Blue said he is attracted to
working with companies that are ripe for turnaround or
"We dont buy into a
company to keep it the same size. One of the attractions is ISA
is public, so we have a lot of plans going to forward," he
said. Those plans could include expanding to nonmetallic
recyclable commodities. "The sky is the limit. We are open to
everything to help it become a big growth vehicle," he