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Sims Metal Management Limited (SimsMM) (ASX: SGM) (NYSE: SMS), the world’s largest listed metal and electronic recycling company, today announced the sale, effective 30 November 2012, of its Arizona scrap metal recycling assets to SA Recycling LLC (SAR). SAR is a joint venture owned equally by SimsMM and Adams Steel, and has operations in California, Nevada and Arizona.
The sale was settled at a price of US$35 million in cash. The sale principally involves the real property related assets for two scrap metal recycling facilities located in Phoenix and Tucson, Arizona. SimsMM will retain the working capital assets of the Arizona business which is anticipated to monetize a further circa US$15 million in cash over 45 days following the sale. This brings the total expected cash generation from the Arizona sale to US$50 million. The transaction will be accounted for in the first half Fiscal 2013 results with an expected pre-tax loss of A$12 million. The loss on sale relates to the value of intangible assets not realised in the sale.
Daniel W. Dienst, Group Chief Executive Officer of SimsMM stated, “The sale of our Arizona assets, following on the heels of our recent dispositions of our Colorado assets, our joint venture interest in Nashville and the acquisitions of assets and businesses in Alabama and Maryland over the past few months, is part of our aggressive repositioning of our shareholders’ precious capital to markets that offer the highest returns on invested capital and meet the long term strategic growth plans we have for the important North American market. The transaction also resolves issues related to the SAR joint venture agreement which granted Arizona as a territory to SAR, allowing us to operate, but to not otherwise expand in Arizona. We are pleased to have resolved this issue, while at the same time allowing our important joint venture partner in the Southwestern U.S. to expand. In this transaction we will retain an interest in the profit and cash flow of the Arizona business through our 50% ownership in SAR.”