PITTSBURGH The marriage between Metalico Inc. and Reamer Recycling Services Inc. has ended, but it appears the 29-month union will have to be untied by the legal system.
Ithaca, N.Y.-based joint venture Reamer-Metalico Scrap Recycling, a full-service metal recycling facility that serviced local and industrial suppliers in Tompkins and Cortland counties, was officially dissolved April 1, according to a regulatory filing.
The original Nov. 10, 2010, agreement decreed that the company would be dissolved April 1, 2013, if neither party chose to buy out the other. Cranford, N.J.-based Metalico notified Reamer in February that it would not exercise its purchase option and said it owed Metalico nearly $1.17 million.
Ithaca, N.Y.-based Reamer has filed an accounting lawsuit on the matter, claiming it is under no obligation to pay the sum to Metalico, according to documents filed in Tompkins County Supreme Court in New York.
It is unclear if the $1.17 million is solely for the assumption of debt, according to Reamer attorney Oliver Blaise of law firm Coughlin & Gerhart LLP. "That is one of the issues we are trying to establish before the court. Papers from Metalico to Reamer really dont answer this question," he said.
Reamer also objects to any attempt by Metalico to reclassify any capital contributions to the company as loans, according to the filing.
Metalico entered into the joint agreement with the scrap metals processor as part of its growth plan (amm.com, May 4, 2011). Metalicos strategy was to increase volumes through expanding its feeder network and exploring select joint ventures with metal processors and suppliers.
Metalicos interest in the joint venture was said to be 50 percent in 2011 and 50.1 percent in 2012. In its recent annual report, the scrap processor revealed that "it would terminate its Ithaca, N.Y., joint-venture agreement upon its expiration" but gave no further details.
In anticipation of the discontinued cash flow, Metalico took a goodwill write-down of $303,000 for 2012, according to its annual report. The joint ventures results were reported as part of Metalicos New York State Scrap Recycling reporting unit.
Metalico has removed references to Reamers Ithaca scrapyard from its website, but Reamers website still features the Metalico logo.
Metalico could not be reached for comment.