Sims Ltd. issues loan to Adams Steel of Nevada LLC

Sims Ltd., with head offices in Rye, New York, has announced that it has provided a $40 million loan to Adams Steel of Nevada LLC (ASN), an entity held by George Adams, that will allow Adams to effectively purchase a 12.4 percent interest in SA Recycling LLC (SAR), headquartered in California, from members of the Adams family. Adams is a member of the company’s joint venture, SAR, and serves as its chief executive officer.

The loan accrues interest at 4 percent for an eight-year term, with the option to extend for an additional two years if the outstanding balance is $30 million or less. The loan is secured by a 24.9 percent interest in SAR and contains standard representations, warranties, covenants and events of default, the company says in a news release.

Sims Ltd. maintains its 50 percent share SAR through a subsidiary of Sims Ltd., the company notes. The Adams family, through Adams Steel LLC, owns the remaining 50 percent of SAR. Under the terms of the SAR Operating Agreement dated Sept. 1, 2007, ASN has the right to compel the Sims Ltd. subsidiary to purchase some or all of its interest pursuant to a formula based on a 4.5 multiple of annual earnings before interest, depreciation, taxes and amortization (EBIDTA) for the prior three years (the Put Right).

Rather than purchase some or all of the interest from Adams Steel, Sims says it is extending a loan to ASN to allow Adams to purchase an interest in SAR from the Adams family members. Adams Steel is unable to exercise the Put Right throughout the term of the loan.

Alistair Field, CEO and managing director of Sims Ltd., says, “SAR has proven to be a successful joint venture over its 13-year history, and we are pleased to continue this strong operating relationship. I will continue to work closely with George Adams to operate efficiently and maximize profit for the company’s shareholders.”

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