Equity Firm Buys Tube City

A private equity firm based in Cleveland has purchased a majority interest in scrap processing and steel mill services company Tube City LLC, King of Prussia, Pa.

Blue Point Capital Partners, with offices in Cleveland, Seattle and Charlotte, N.C., used its own equity as well as funding provided by Tube City management and funds borrowed from four banks to make the purchase.

“We have found an excellent partner in Blue Point and look forward to working with them,” says I. Michael Coslov, chairman and CEO of Tube City. “They have invested both in our business and in our proven management team and will enable that team to access capital markets and realize our growth objectives.”

Blue Point principal Chip Chaikin has expressed confidence in the growth prospects of their newly acquired scrap company. “Tube City has grown due to its strong focus on the customer,” he remarks. “Tube City’s expertise enables the company to perform a wide variety of functions outsourced by their customers, saving them money and time. We are excited to partner with Tube City’s impressive management team and look forward to expanding this strong platform into both enhanced services and new geographies.”

Tube City provides scrap management, slag processing and metal recovery services to integrated steel mills, mini-mills and foundries throughout North America and to U.S. Steel Co. mills in Eastern Europe. In a March 2002 Recycling Today effort to find the 20 largest ferrous scrap processors in the U.S., Tube City ranked third.

Its scrap management services include scrap handling and processing; outsourced purchasing; logistical support; and a proprietary least cost-suitable charge melt chemistry optimization model.

A news release issued jointly by Blue Point and Tube City notes that the company “has grown despite a challenging environment in the steel industry, with 22 operating plants and 10 trading offices, 1,000 employees and gross revenues in excess of $500 million.”