8-year-old scrap recycling company based in Northern California.
This scrapping company has geared up its personnel to accommodate a substantial increase in volume and revenues. The impetus for the volume increase of approximately 7x the scrap input is the hiring of a key marketing executive with 20 years of experience with larger players, namely Sims and Schnitzer. This executive has key contacts in Cali, Reno, and Sacramento who wish to send the volumes to CM.
The gating item for this enormous expansion is the ability to process and move the finished product to the end buyer, hence this relevant equipment financing of 1,100,000.
In parallel, the company is finishing a negotiation with a larger entity in the space which is established and has revenues on the order of 350M$. This strategic alliance will provide CM with an extra 30$ per ton in purchase margin, which is quite material to enhanced cash flows.
And this new buyer will desire to take all the company scrap it can provide in order to feed its newly purchased 25M$ metal shredder.
Additionally, the Company has commenced dialogue with two potential acquisition candidates in NV and CA, which portend to further expand free cash flows and volume margins.
Further, the company has plans to complete in early '24, a public offering of its shares to bolster the capital base for additional M and A resources to grow the business.
This combination of organic growth and rollups will provide the equipment financer with potential additional transactions in the future as the facility growth needs for equipment arise.
We have financials that show the ability to obtain more feedstock and process this with the new equipment drives cash flows and provides for internally generated ability to expand-in the main company and an additional acquisition candidate.
After the first Quarter profits realize, then I intend to go back to several underwriters who have already done diligence-the will be the start of the IPO process.
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