Scrap metal recycling company Industrial Services of America (ISA), Louisville, Ky., has entered into a management agreement with the Louisville-based private equity firm Blue Equity LLC.
Under the 12-month agreement, Blue Equity will provide management services to ISA that include working with ISA’s existing management team to review operations and identify opportunities for growth and profitability.
ISA’s board of directors says its considers Blue Equity’s role key to its future plans to develop and improve upon ore business operations, enhance the current platform, secure strategic alliances and diversify corporate holdings in domestic and international markets, according to a news release issued by Blue Equity April 1, 2013.
Jonathan Blue, chairman of Blue Equity, has a substantial background in the scrap metal industry. Prior to his involvement in the private equity sector, Blue was vice president of Progress Rail Services Corp. He also was involved with his family’s scrap metal business, Louisville Scrap Material Co.
“Blue Equity’s business philosophies and practices have successfully transcended a diverse range of industries, and now it seems we have come full circle, returning with this transaction to the scrap and recycling businesses,” Blue says. “We look forward to working together with our partners at ISA to realize our shared vision for the future.”
Blue says that while the private equity business is becoming more visible in the recycling industry, his firm has substantial advantages. “It is not just that we understand the sector, but we also understand the diversity of the industry.”
An ISA source says that from the scrap metal company’s perspective, Blue’s experience with former scrap metal companies will be helpful to ISA as it seeks to grow and diversify its operations.
In the news release, ISA founder and CEO Harry Kletter says he has known Blue his entire life. “He and his team have an impressive track record, which I am confident will benefit our company and our shareholders,” says Kletter. “I am thrilled that he and his team have agreed to take ISA into a new era of growth.”
In a move to demonstrate Blue’s confidence in ISA, ISA issued 125,000 shares of its common stock to Blue Equity in early April in a private placement at a per-share purchase price of $4. Subject to shareholder approval and vesting provisions, ISA also has granted options for a total of 1.5 million shares of its common stock to Blue Equity at an exercise price of $5 per share.