Sims, Adams Link Up

Sims Group Ltd. has entered into an agreement to merge its Southern Californian Metal Recycling assets with Adams Steel LLC to create a new entity SA Recycling LLC. SA Recycling, which will be owned 50 percent by Simsmetal West LLC and 50 percent Adams Steel, will operate in Southern California, Arizona, Southern Nevada and Northern Mexico.

The venture will combine Sims’ deep water facility at the Port of Los Angeles with Adams Steel’s two inland shredding operations and extensive network of inland feeder yards.

The new business will be run by George Adams, current president of Adams Steel. He will report to a board comprising of eight directors, evenly split between Adams and Sims. Sims will nominate both the chairman and CEO of the joint venture.

The newly formed business will handle more than 2 million metric tons of ferrous scrap and nearly 100,000 metric tons of non ferrous scrap. Revenues are expected to top $600 million.

Commenting on the merger, which is subject to the notification and waiting period requirements of the U.S. Hart-Scott-Rodino Antitrust Improvements Act, Group Chief Executive, Jeremy Sutcliffe said, "Sims has had a close association with Adams Steel based around its long term exclusive supply agreement with the former Hugo Neu operations. This agreement was due to expire in early 2008 and the combination of the two businesses is a logical extension of our existing relationship," said Jeremy Sutcliffe’s chief executive. "The merged business is a perfect fit of Sims’ export capability and Adams Steel’s strength and reach in the domestic sourcing of material."

The majority of ferrous material arising from the new entity will be sold to Sims Group Global Trade Corp. under a third party sales agreement. SA Recycling anticipates having its own stand-alone banking facilities to finance working capital and growth.

"This is an exciting further step in Sims’ strategy of strengthening its position in the rapidly evolving and highly dispersed North American metals recycling industry, and delivers a solid platform for further growth throughout the South West of the US," said Sutcliffe.