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Private equity firm signs deal to manage ISA

Keywords: Tags  scrap metal processor, Industrial Services of America, Brian Donaghy, Harry Kletter, Blue Equity, Jonathan Blue, Lisa Gordon

PITTSBURGH — Industrial Services of America Inc. (ISA) has entered into an agreement to be managed by a private equity firm in an effort to turn the company around.

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 ISA’s 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 ISA’s common stock at $4 per share—a premium to the stock’s April 1 opening at $3.38 per share—and has an option to pick up a total of 1.5 million shares at $5 per share.

Blue, the private equity firm’s 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 Equity’s 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 (, 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 (, May 9).

ISA president and chief operating officer Brian Donaghy said he will work closely with Blue Equity.

Blue Equity’s 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 growth.

"We don’t 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 said.

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