Scrap Industry News

Progress Rail Services Corp., Albertville, Ala., could soon be up for sale.

The southeastern scrap metals processor and railroad equipment supplier is owned by Raleigh, N.C.-based Progress Energy Inc., which hired a financial adviser recently to assist the company in evaluating its strategic alternatives with respect to Progress Rail and another of its affiliate companies, MEMCO Barge Lines Inc., a shipping company.

Although the alternatives could involve a sale of all or parts of the two subsidiaries, the company says in a press release that “there is no assurance that any transaction will be completed and [there is] no timetable for completing such a transaction.”

The two companies are wholly owned subsidiaries of Electric Fuels Corp., which Progress Energy acquired in November when it bought Florida Progress Corp., an electric utility headquartered in St. Petersburg, Fla.

“As we have said all along, our strategy is to focus on growing our core business: providing high-quality energy-related services to our customers,” says Tom Kilgor, president of Energy Ventures, Progress Energy’s business unit managing its unregulated companies. “To continue the successful growth of Progress Rail and MEMCO, and to allow both companies to expand their services to customers, both must align their operations with entities whose core business focus is more closely related to the rail and barge industries, respectively.”

Progress Rail was founded in 1983. Its railroad equipment, repair and leasing operations are the largest segment of Progress Rail’s business and include offices and facilities in several states as well as Canada and Mexico. According to a representative with the company, Progress has roughly 40 facilities involved in various facets of the railway services industry

In addition to its own scrap processing operations, Progress Rail acquired several other yards in recent years, including Louisville Scrap Material Co. Inc., Louisville, Ky.; Mansbach Metals Co., Ashland, Ky.; and Columbia Steel & Metal Co. Inc., Columbia, S.C. It’s also the scrap broker for Georgetown Steel Corp., a steel wire producer in Georgetown, S.C.

The company has a total of 10 locations, with a majority of the locations in the southeastern U.S.

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The 2001 edition of the North American Scrap Metals Directory, published by the Recycling Today Media Group, Cleveland, is now available for $88.50. The directory includes a comprehensive listing of more than 8,900 scrap metal dealers and processors. Listing information includes company name, address, phone, fax, Web site, e-mail address, company contacts and materials handled. It is considered the most comprehensive directory of its kind. Copies can be ordered by contacting Lori Skala at (800) 456-0707, ext. 201 or e-mailing her at lskala@gie.net.

Commercial Metals Revises Earnings

Unwelcome court decisions have caused Commercial Metals Co. (CMC), Dallas, to revise the results of its fiscal year 2001 first quarter, which ended Nov. 30, 2000. The downward revision causes the company’s ledger to move from black to red for the three-month period.

The appeals rulings, made in late December, arise from a trial that ended in October, 1999. The lawsuit involves a former customer who contracted for supply and fabrication of structural and reinforcement steel on three jobs with a CMC division located in Victoria, Texas.

The court ruled that the subsidiary was owed approximately $333,000 by the contractor, but also found that the contractor’s business had incurred compensatory damages for delays related to the jobs and loss of the value of the contractor’s business totaling approximately $2.2 million with prejudgment interest on both sums. The court further awarded the contractor punitive damages of approximately $6.6 million and attorney’s fees. CMC CEO Stanley A. Rabin says, “While we intend to appeal the judgment if entered based on what we believe are erroneous findings of fact and conclusions of law, we think this earnings revision is appropriate given the unanticipated award of punitive damages.”

CMC will set aside a cash reserve for the quarter in anticipation of a judgment likely to be entered in January against the company and its subsidiary. The effect of the increase in the reserve will reduce previously reported first quarter net earnings of $4.7 million, or 36 cents per diluted share, to a net loss of $2.2 million, or 17 cents per diluted share.

Commercial Metals Co. operates scrap yards, steel mini-mills, steel fabrication plants and other metals production facilities, as well as marketing and trading offices, concrete-related product warehouses, and an industrial products supply company.