Scrap Industry News

Metal Management Closes Chapter 11 Book

Metal Management Inc., Chicago, has met the conditions required for its emergence from Chapter 11 bankruptcy and has begun operating without bankruptcy court supervision. The company received approval of its reorganization plan in mid-June from the U.S. Bankruptcy Court for the District of Delaware.

 “I am extremely pleased that Metal Management has emerged from Chapter 11 so quickly,” says Albert A. Cozzi, chairman and CEO of the company. “We have come out with one of the strongest balance sheets in the industry.  We appreciate the confidence that our scrap metal suppliers have shown in us, which has allowed us to maintain our market share, and we are anxious to move forward and grow our business profitably in each of the major markets we operate facilities in.”

Metal Management is one of the largest metals recyclers in the U.S., with more than 40 recycling facilities in 14 states and estimated annual revenues of about $800 million.

 “We can now continue our operational acceleration efforts to be the low cost processor with a leading market share in every market we serve,” remarks Michael W. Tryon, president and chief operating officer of the company. “Emerging from Chapter 11 allows us to grow profitably.”

As part of its reorganization, Metal Management has entered into a new credit agreement with its existing senior lenders providing the company with $150 million of borrowing capacity.  The senior credit agreement matures in June 2003.  As part of the plan, the company also restructured its $30 million senior secured notes due May 2004.  Substantially all other debt of the company will be converted to equity of reorganized Metal Management.

Schnitzer Reports Profit for Quarter

Schnitzer Steel Industries Inc., Portland, Ore., has reported net income of $1.5 million on revenues of $69.0 million for the quarter ending May 31, the third quarter of the company’s fiscal year.

The amounts compare to net income of $4 million on revenues of $94.9 million for the third quarter last year. For the first nine months the company reported net income of $4.9 million on revenues of $227.2 million. For the same period last year, Schnitzer reported net income of $8.1 million on revenues of $242.0 million

The company’s managers say to remain profitable in the depressed steel and scrap market, the company focused on a number of areas, including optimizing its product mix. The company focused on producing and selling products for which its customers were willing to pay prices that allowed it to remain profitable, while conceding other markets to lower-cost imports.

Web Sites Winding Down

While it’s still possible for recyclers to buy and sell materials online, the number of Web sites to choose from is declining. Several Web sites that came online catering to the metals industry or the paper industry ceased operations in the first half of 2001.

MetalSite, Pittsburgh, and its affiliated company, ScrapSite, are among the most recent casualties, having suspending operations June 8th. Ralph Pinkert, president of ScrapSite, says that despite the company generating more than $60 million in transaction volume in the roughly one year it has been in business, the significant cost of running the operation has forced the company to close.

Pinkert noted the company hopes to re-launch the site in the future. One of the biggest problems the company suffered from was the extreme difficulties many of the site’s backers have had.

MetalSite was launched in 1998 with support from Weirton Steel, LTV Steel and several other large steel companies.

When cash began running short last year, MetalSite’s steel industry backers had too many problems of their own to provide any more funds. MetalSite’s nine stockholders had lent $35 million to the business, and MetalSite had not been paying interest on those loans, according to the Pittsburgh Post-Gazette.

A statement released by ScrapSite notes that the company is pursuing restructuring possibilities.

Anonline marketplace for specialty metals, Metalspectrum LLC, Atlanta, has also ceased operations. The company cited less-than expected user acceptance and high operating costs as reasons for the closure.

The trading site began operations slightly more than one year ago. The plan for the site was to act as a neutral market for buying and selling aluminum, stainless, copper, brass and other metals. MetalSpectrum had the initial backing of a number of large metals industry companies.

Alan Turfe, former CEO of MetalSpectrum, says the site’s “strength was in the technology it developed and the people who developed it. However, a combination of poor market conditions and slow user adoption has prevented most public marketplaces from becoming a commercial success. We have not been an exception, and it was important to recognize the realities that led to this difficult decision.” MetalSpectrum employed more than 80 people at its peak.

On the paper side of the industry, PaperExchange, Boston, has halted operations at its Web site, although users are referred to the www.Paper-Space.com site run by a German company. Several other paper industry sites also appear to have discontinued as active trading sites, including Fibermarket.com, Atlanta; E-cycled.com, Wilsonville, Ore.; and E-scrap.com, Cerritos, Calif.