Fort Dearborn Advisors announces the successful sale of substantially all of the equipment and real estate of Metal Recycling Systems, Inc. ("MRS" or the "Company"), a full-service metal recycling center that sold its processed/recycled metals to aluminum producers and smelters, other metal recyclers and steel mills.  The Company had a solid reputation for processing a diverse range of products and selling high grade material to its customers.

The Company experienced operational challenges in 2012 and 2013, including difficulties procuring adequate amounts of high-grade input material, production inefficiencies that led to a build-up of inventory, and a difficult pricing environment due to unfavorable changes in commodity prices.  In addition to the financial challenges brought on by the difficult trading environment, the Company had invested in its shredding and retail operations in order to diversify its business.  This resulted in a higher fixed cost structure, including higher debt levels.  

While analyzing the situation, Fort Dearborn and the owners determined the best course of action was to quickly sell the business assets to a buyer with adequate capital to operate the business, simultaneously take actions to improve the profitability of the business and to process lower grade material to generate cash.  Fort Dearborn utilized its operational and investment banking expertise to work with the management team to create a transaction strategy that called for a vigorous sale process while managing the business through the challenging operating environment.  Fort Dearborn quickly developed marketing materials and a targeted list of potential acquirers.

Fort Dearborn's marketing efforts yielded multiple indications of interest.  After plant visits, initial diligence, and detailed discussions, Fort Dearborn assisted the owners in selecting the best potential acquirer based on strategic fit, deal structure and speed to close.  MRS agreed to sell substantially all of the equipment and real estate to an affiliate of Scrap Metal Services, L.L.C.  Scrap Metal Services is a leading metal recycling company with operations across seven states and Mexico.

In addition to advising on the sale process, Fort Dearborn assisted the management team in navigating a difficult liquidity position and in maintaining the confidence of the Company's senior lender, which was necessary to continue to operate the business through a sale.  By reaching a successful close with a strategic acquirer and by executing a plan to maximize the realization of retained assets, the Company was able to realize significantly higher proceeds as compared to an orderly wind-down of the business.

"The Fort Dearborn team was instrumental in driving the process to a successful completion while assisting us through a difficult operating environment. Fort Dearborn provided guidance and advice throughout the transaction to maximize the sales price." - Scott Irvine, Co-Owner, Metal Recycling Systems, Inc.

While the details of each engagement vary, this transaction was typical of our investment banking focus of representing privately-held, middle market companies.  Please keep us in mind for proven middle market investment banking expertise, especially in "story" transactions where our operating skills and consulting excellence lend additional value.  We look forward to working with you.