Industrial Services of America, Inc., (ISA), a company that buys, processes and markets ferrous and non-ferrous metals and other recyclable commodities, offers waste management programs and equipment to commercial customers and sells used auto parts, today announced the sale of its Waste Services segment. On December 4, 2015, Industrial Services of America, Inc. and WESSCO, LLC, a wholly owned subsidiary of ISA (“WESSCO,” and together with ISA, the “Company”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) pursuant to which the Company sold its 鈥淲aste Services Segment,鈥� consisting of substantially all of the assets used in (i) the Company鈥檚 commercial, retail and industrial waste and recycling management services business which the Company operated under the name 鈥淐omputerized Waste Systems鈥� or 鈥淐WS,鈥� and (ii) the Company鈥檚 equipment sales, rental and maintenance business for the commercial and industrial waste and recycling industry which the Company operated under the name 鈥淲aste Equipment Sales and Service Company.鈥�
The Company received cash consideration at closing of $7.5 million, less $150,000 retained by Purchaser which will be released to the Company or retained by the Purchaser in connection with any working capital adjustment. Purchaser assumed certain liabilities relating to the Waste Services Segment, including but not limited to, current liabilities, warranty liabilities, and post-closing liabilities incurred in connection with transferred contracts.
The sale included substantially all of the assets of the Waste Services Segment including, but not limited to, current assets, accounts receivable, tangible personal property, certain leases, inventory, intellectual property, rights under transferred contracts, rights of action and all associated goodwill and other intangible assets associated with the transferred assets.
The Asset Purchase Agreement contains standard and customary representations, warranties and covenants, including a restrictive covenant under which the Company will be prohibited from competing with the Waste Services Segment for five years following the closing. The Company used the proceeds, net of transaction costs, to repay debt. The Company used the proceeds to repay in full the Company鈥檚 outstanding indebtedness with Bank of Kentucky, Inc., and to repay in full ISA鈥檚 term loan from Wells Fargo Bank, National Association (“Wells Fargo”). The Company also used the proceeds to pay all outstanding amounts on ISA鈥檚 $5.0 million revolving line of credit with Wells Fargo which will remain available following the closing. The material terms of ISA鈥檚 Credit Agreement with Wells Fargo dated as of June 13, 2014, subsequently amended, including the terms relating to the revolving line of credit, have been previously reported on Current Reports on Form 8-K filed with the Securities and Exchange Commission on June 19, 2014, January 15, 2015 and November 12, 2015. 鈥淭he Company is pleased with completing this transaction and providing liquidity to the business,鈥� noted ISA President Sean Garber. Mr. Garber added, 鈥淔ollowing a very challenging year in the metal commodity markets, the Company believes the sale of our Waste Services segment is a critical step in positively positioning the Company for future growth and opportunity.鈥�
D.A. Davidson & Co. acted as exclusive financial advisor to Industrial Services of America in the transaction.
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