Industrial Services of America Inc. (ISA) is struggling to
restructure its debt to deal with pending covenant issues and
its tentative financial health.
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
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
"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
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
"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.
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.