Sims to Acquire U.S. Scrap Metal Dealer for $94m

SEATTLE (Scrap Monster):  Metal recycling business Sims has entered an agreement to purchase Tri Coastal Trading assets in Houston including harbourside land and a deep sea docking facility for USD66.5 million ($94 million) and divest its land holdings.

The context: Sims’ ferrous operation will be consolidated onto the TCT location, substituting the service agreement that Sims has with TCT’s Enstructure business.

This will provide Sims will get exclusive access to harbourside land and a secure, deep-seas dock facility in Galena Park industrial area of Houston.

The move is expected to generate “significant operating and administrative cost savings and will expand Sims’ logistics capabilities to source and ship scrap metal by truck, rail, barge and bulk, both domestically and internationally”.

Following the integration and incorporation of synergies across the two businesses, total EBITDA including Sims’ existing ferrous and nonferrous business in Houston will be in excess of USD25 million at current sale prices.

Sims has also entered an agreement to sell its Mayo Shell property in Houston. The broader divestment of Sims’ Houston land portfolio, including Mayo Shell, is estimated to generate USD100 million.

What they said: “While we have made significant progress in turning our Houston business around over the last two years, its ultimate potential was always hampered by the lack of a deep-sea dock, which would have only been achievable with significant capital expenditure at our Mayo Shell site,” Sims CEO and managing director Stephen Mikkelsen said.

“TCT is an ideal solution to this problem. We free up all our Houston land for sale, avoid significant capital expenditure on the current facilities, significantly reduce our cost per tonne, and meaningfully grow out EBITDA, EBIT and ROIC.”

 Courtesy: www.capitalbrief.com