Metalico, Inc. (MEA) is a ferrous and non-ferrous scrap metal processor operating in New York, New Jersey, Pennsylvania, Texas, Mississippi and Ohio. The company is also the nation’s largest fabricator of lead-based products other than batteries. On a nationwide basis, Metalico sells to a diverse industrial customer base.

Last month the company entered into a definitive purchase agreement with institutional accredited investors to raise $100M of gross proceeds in a private placement of 7 percent notes. The notes are convertible into shares of Metalico’s common stock and warrants which are exercisable for shares of Metalico’s common stock. Metalico has also agreed to terms of a definitive asset purchase agreement for a family-owned, multi-yard, fully integrated scrap metal recycling operation in Western Pennsylvania, and intends to use approximately $69M of the net proceeds of the private placement for the purchase of the assets.

The total purchase price for the acquisition is $76M, $69M of which will be paid in cash. Seven million of the purchase price will be in shares of Metalico’s common stock, having an aggregate value of $7M determined at a price per share equal to 90 percent immediately preceding the closing date. In connection with the private placement, Metalico will issue 7 percent senior convertible notes in the aggregate principal amount of $100M, which will be convertible into shares of common stock at an initial conversion price of $14.00 per share. The notes will mature in April 2028 and are subject to certain redemption, repurchase and anti-dilution rights.

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