PITTSBURGH Metalico Inc. plans to put some of its non-core assets on the selling block to strengthen its balance sheet.
The Cranford, N.J.-based metal recycler announced it will sell undisclosed assets and use the money to pay down institutional debt. Its directors worked to devise an asset sale strategy following the companys annual stockholders meeting.
"Weve identified assets that are less synergistic with our strategy of growing our core scrapyard and shredder network and weve begun the process," Carlos E. Agüero, Metalicos president and chief executive officer, said in a statement June 4.
Agüero said the decision is part of the companys intention to reduce its leverage. "The debt burdens carried by some in our industry since the commodities markets began to turn in 2008 and 2009 have impacted many recyclers. We understand that reducing our leverage is the best way to combat the overcapacity and weakness in pricing that continue to challenge the scrap metal business," he said.
The company has been struggling financially for several years, posting full-year losses of $34.8 million in 2013 and $13.1 million in 2012 (amm.com, March 14).
This year has started on a tough note, with Metalico reporting a $3.9-million loss for the first quarter (amm.com, May 15). The company said it suffered due to compressed margins and shipment interruptions resulting from harsh winter weather.
The company operates three segments: metal recycling, platinum group metals and lead fabricating. The companys core strategy is its metal recycling activities, which include three shredders in New York, Ohio and Pennsylvania, according to its annual regulatory filing.
It is unclear what assets will be put on the market, and company executives declined to comment.
From 2007 through 2010, it embarked on a large acquisition spree, which included shredders from the Snyder Group in Pittsburgh and Youngstown Iron & Metal. Last year, it made two acquisitions.