Metalico Enters Agreement to Acquire Two Scrap Facilities

Locations are in Ohio, New Jersey.

Metalico, Inc. has entered into separate agreements to purchase substantially all of the operating assets of Annaco, Inc., an Akron, Ohioi-based scrap metal recycler, and most of the outstanding capital stock of Totalcat Group, Inc., a Newark, NJ, recycler and manufacturer of catalytic devices.

Metalico has scrap operations in New York and Pennsylvania, and lead fabricating facilities in Alabama, Illinois, Nevada and California. Its Metalico Akron, Inc. subsidiary is buying Annaco’s assets while another subsidiary, Metalico Akron Realty, Inc., will acquire rights to the real property used in Annaco’s operations from affiliates of Annaco.

Annaco processes around 150,000 tons of ferrous and nonferrous scrap a year. The company specializes in motor block processing.

Metalico also is acquiring 82.5 percent of Totalcat’s stock in the current transaction, with both sides having rights to require the sale of the remaining Totalcat stock to Metalico at a future date.

Totalcat operates three primary lines of business. Its Federal Autocat subsidiary recovers platinum group metals from scrap ceramic and metallic substrate catalytic converters. Through HyperCat Advanced Catalyst Products™ it manufactures innovative emission control products for the emerging specialty catalytic device market utilizing proprietary nanotechnology. Another HyperCat entity is developing proprietary technology for the cleaning and recycling of diesel particulate filters. Totalcat also has operations in West Goshen, Pennsylvania.

"These acquisitions dovetail perfectly with our strategy to expand our footprint along the Great Lakes corridor and to diversify our base of commodities," said Carlos Agüero, Metalico’s president and CEO. "Coupled with our recent acquisition of a specialty metals recycler in Pennsylvania, we are well on our way to the geographic and commodity diversity that has been part of our long-term goals."

The aggregate purchase price for the two acquisitions is approximately $63 million (including an allocation for the Annaco real property interests), subject to additional closing adjustments for Annaco’s inventory at closing in excess of a predetermined amount and Totalcat’s net working capital at closing in excess of a predetermined amount. Metalico Akron will also make an annual payment to Annaco for fiscal years 2007, 2008, and 2009 (any payment for 2007 to be prorated) if the acquired assets perform over a predetermined income level during such periods. Metalico expects to finance the purchases through debt facilities to be entered into at the closing of the first transaction and available cash, including a portion of the proceeds of Metalico’s recently announced private equity placement.