PITTSBURGH Industrial Services of America Inc. (ISA) is struggling to restructure its debt to deal with pending covenant issues and its tentative financial health.
The Louisville, Ky.-based metal recycler posted a $1.2-million loss for the three months ended June 30, virtually unchanged from the second quarter in 2012 on revenue that fell 19.5 percent to $40.12 million. The loss included $609,000 in interest expense. Part of the interest paid was for long-term debt held by one financial institution.
The recycler indicated that it is not in compliance with all its debt covenants and is working in an expeditious manner to settle the issue. Previously, the bank had waived the covenant but had not done so for the second quarter, ISA said, and it is working to complete the restructuring as soon as possible, but cautioned investors that the outcome could be harsh if this fails to happen.
"The inability to complete this debt restructuring in a satisfactory manner could have a material, adverse impact on the company. Further, if the bank were to call the debt due immediately, it would have a material, adverse impact on the company," ISA said. "As of June 30, we are not in compliance with all loan covenants in our senior debt credit agreement and our senior lender has the right to accelerate our obligations at any time, which raises substantial doubt about our ability to continue as a going concern."
ISAs cash flow is positive, it has not missed a payment to a vendor or a bank and the company expects to work through the issue, a company spokesman said.
"We intend to increase efficiencies and productivity in our core business while remaining alert for possible acquisitions, strategic partnerships, mergers and joint ventures that would enhance our profitability," ISA said in its regulatory filing.
ISAs recycling unit posted second-quarter revenue of $38.23 million, down 20.8 percent from $48.24 million a year earlier on fewer shipments and lower selling prices.
The company said that stainless shipments increased 2 percent in the quarter but nickel prices were down 12 percent from a year earlier.