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Schnitzer Steel Completes Separation with Hugo Neu

10/04/2005 - Schnitzer Steel Industries, Inc. and Hugo Neu Corp. have completed the transaction to separate and terminate their various joint venture relationships.

Schnitzer Steel Industries, Inc. and Hugo Neu Corp. have completed the transaction to separate and terminate their various joint venture relationships.

Schnitzer's Pick-N-Pull Acquires GreenLeaf Auto Recyclers

Schnitzer Steel Industries’ subsidiary Pick-N-Pull Auto Dismantlers has acquired GreenLeaf Auto Recyclers, LLC, an auto dismantling and recycling business that sells reclaimed auto parts primarily to collision and mechanical repair shops. Pick-N-Pull, a leading self-service used auto parts retailer, will add GreenLeaf's 22 locations to its existing network of 30 stores, significantly increasing its presence in the Southern, Eastern and Midwestern United States.

The newly acquired locations are in Arizona, Florida, Georgia, Illinois, Massachusetts, Michigan, Nevada, North Carolina, Ohio, Virginia, and Texas. Prior to this announcement, Pick-N-Pull had existing operations in nine states and two Canadian provinces that serve more than four million retail customers and process more than 225,000 cars per year. The combined operations of Pick-N-Pull and GreenLeaf will make Schnitzer Steel one of the largest suppliers of used OEM parts in the industry.

The total consideration paid to GreenLeaf for these operations was $22.5 million, subject to a post-closing working capital adjustment. In a related transaction, Pick-N-Pull purchased five parcels of real estate and certain GreenLeaf debt obligations from Ford Motor Co. GreenLeaf leased these parcels in connection with its business. Total consideration for the property and the promissory notes was $21.5 million.

Under the joint venture Master Agreement, Schnitzer received:

  • The assets and related liabilities of Hugo Neu Schnitzer Global Trade related to the trading business in Russia, Poland, Denmark, Finland, Norway and Sweden. Also included was a non-compete agreement that bars Hugo Neu from buying scrap metal in certain areas in Russia and the Baltic region for a five-year period ending on June 8, 2010.
  • The joint ventures' various interests in the New England operations (which primarily operate in Massachusetts, New Hampshire, Rhode Island and Maine).
  • Full ownership in the Hawaii operations.
  • A payment of $52.3 million in cash, subject to post-closing adjustments.

Hugo Neu, in exchange, assumed total ownership of:

  • The joint venture operations in New York, New Jersey and California, including the scrap processing facilities, marine terminals and related ancillary satellite sites, the interim New York City Recycling Contract, and other miscellaneous assets.
  • The portions of Hugo Neu Schnitzer Global Trade that is not related to the Russian and Baltic trading business. This was split with HNS Global Trade redeeming its 50% membership interest from Schnitzer.

"We not only received very attractive scrap metal franchises, but an excellent team of motivated people that have helped build these quality businesses," said John D. Carter, President and CEO. "We are making good progress toward integrating these businesses into our existing operations. It's been our pleasure to begin to become better acquainted with the managers and employees who operate these businesses. We believe these businesses combined with our existing wholly-owned operations will produce significant benefits in making Schnitzer an even greater company in the years ahead."

Schnitzer Steel Industries is one of the nation's largest recyclers of ferrous metals, a used auto parts retailer with more than 50 locations across the U.S. and in Canada, and a manufacturer of finished steel products. The company has a significant metals presence on both the West Coast and Northeastern seaboard, as well as a trading business that principally sells recycled metal products in foreign markets. In addition, the company's steel mill — Cascade Steel Rolling Mills — has an annual production capacity of approximately 700,000 tons of finished steel products.