LOUISVILLE, Ky.--(BUSINESS WIRE)--Industrial Services of America, Inc. (NASDAQ: IDSA) (“ISA” or the “Company”), a company that buys, processes and markets ferrous and non-ferrous metals and other recyclable commodities for domestic users and export markets and offers programs and equipment to help businesses manage waste, today announced that it has entered into a management services agreement (the “Management Agreement”) with Louisville-based Algar, Inc. (“Algar”), effective December 1, 2013.
The Management Agreement provides for various executives and employees of Algar to assist ISA with day-to-day operations, in an attempt to strengthen the Company’s financial position and operating performance in the challenging scrap metal recycling market. Algar’s executives and employees have extensive experience working in scrap procurement and processing. Sean Garber, Algar’s Chairman and Chief Executive Officer, formerly worked at ISA and was its President from 1997 to 2000. As such, Mr. Garber has direct experience with the Company’s facility and operations. In accordance with the Management Agreement, the Company’s Board of Directors has appointed Mr. Garber to serve as President.
ISA’s Board of Directors considers Algar’s experience in the scrap recycling industry, familiarity with ISA and immediate availability to fulfill the role critical to its decision to enter into the Management Agreement with Algar. The term of the Management Agreement is effective December 1, 2013 and extends through December 31, 2016.
“We are very pleased to have identified a group with extensive industry and operating experience in scrap recycling. We are excited about Sean’s plan to grow the Company through the acquisition of auto parts companies and other businesses. We believe he and his team can immediately and beneficially impact ISA’s operations, and welcome him to the Company,” stated Orson Oliver, the Company’s Chairman and interim Chief Executive Officer.
Mr. Garber added, “My team and I are excited to bring to bear our industry expertise, operating experience and ability to develop a strong corporate culture to ISA. I am thankful to Mr. Kletter for giving me the opportunity to come to Louisville in 1996. I look forward to working with the ISA team to build the Company into a larger, stronger business, which ultimately should bring value to ISA shareholders.”
As part of the Management Agreement, Mr. Garber and Mr. Oliver have received an Irrevocable Proxy from Harry Kletter, K & R, LLC and The Harry Kletter Family Limited Partnership (collectively, “Kletter”), which provides Mr. Oliver and Mr. Garber joint voting authority over the shares of the Company’s common stock owned by Kletter. Mr. Kletter is the Company’s largest shareholder.
The Management Agreement provides annual incentive compensation during its term equal to 10% of any increases in year-over-year pre-tax income. Also in connection with the Management Agreement, ISA has granted an option for a total of 1,500,000 shares of its common stock to Algar at an exercise price per share of $5.00. The issuance of such options is subject to shareholder approval and exercisability provisions based upon the Company’s performance. The December 2, 2013 closing price per share of the Company’s common stock on the NASDAQ Capital Market was $2.54. The Company will reimburse Algar for expenses incurred in performing its services under the Management Agreement, including salaries of executives and other employees.
ISA and Algar have also agreed to use their best efforts to effect a business combination between them as soon as is reasonably practicable.
ISA’s SEC filings are available for review at the Securities and Exchange Commission web site at http://www.sec.gov/edgar/searchedgar/companysearch.html.
Headquartered in Louisville, Kentucky, Industrial Services of America, Inc., is a publicly traded company whose core business is buying, processing and marketing scrap metals and recyclable materials for domestic users and export markets. Additionally, ISA offers commercial, industrial and business customers a variety of programs and equipment to manage waste. More information about ISA is available at www.isa-inc.com.
About Algar, Inc.
Algar specializes in the procurement and sale of new and used auto parts, as well as in automotive and metal recycling. The Auto Parts division is engaged in the business of selling used and new auto parts to body shops, car dealers, auto parts dealers and walk in retail customers. The Automotive and Metal Recycling division purchases junk and wrecked cars from auto parts yards, wreckers and individuals in order to process and recycle. The Ferrous Division’s major products include recycling of steel and iron products, whereas the Non-Ferrous Division recycles copper, aluminum, and brass.
This news release contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ from predicted results. Specific risks include fluctuations in the price of recycled materials, varying demand for waste managing systems, equipment and services, competitive pressures in waste managing systems and equipment, competitive pressures in the waste managing business, loss of customers, and the ability of the Company to negotiate and consummate a business combination with Algar Further information on factors that could affect ISA’s results is detailed in ISA’s filings with the Securities and Exchange Commission. ISA undertakes no obligation to publicly release the results of any revisions to the forward-looking statements.