Bank of Kentucky Provides ISA New Credit Facility
Industrial Services of America announced that it obtained a new $4 million credit facility from The Bank of Kentucky. The credit facility supports and augments ISA’s existing credit facility with Fifth Third Bank.
ISA established the new credit facility with The Bank of Kentucky to provide ISA additional liquidity and promote the growth of ISA’s Waste Equipment Sales and Services operating subsidiary. WESSCO owns and operates a fleet of compactors, balers and other waste handling equipment, which it rents under multi-year contracts to commercial and industrial customers. ISA believes that the WESSCO operating subsidiary offers stable, recurring revenue and cash-flow, complementing ISA’s metals recycling business, which is prone to fluctuation with changes in commodity prices.
In light of WESSCO’s substantial opportunity to purchase and deploy new waste handling equipment, The Bank of Kentucky provided a $1 million capital expenditure facility in addition to a $3 million term loan. The capital expenditures facility has a six-year term and may be used exclusively by WESSCO to purchase new waste handling equipment. By providing WESSCO a separate pool of capital to purchase new equipment, the new loan allows ISA to reinvest its free cash-flow into its metals recycling business.
The $3 million loan has a five-year term and is secured by specific WESSCO rental equipment as well as a conditional assignment of contracts. The proceeds will be used by ISA to refinance debt associated with the Fifth Third credit facility. Both loans bear interest at a rate that is lower than ISA’s rate on its existing loans, and are subject to a fixed charge coverage covenant that is more lenient than ISA’s Fixed Charge Coverage covenant with Fifth Third.
“We are so pleased to obtain this new capital from The Bank of Kentucky,” commented Orson Oliver, ISA’s chairman and interim chief executive officer. “Bank of Kentucky demonstrated a genuine vote of confidence by making this capital available. Not only does the loan give WESSCO a tremendous runway for growth, it also reduces our cost of capital.”
ISA closed on the new $4 million loan on October 15, 2013.
Headquartered in Louisville, KY, Industrial Services of America is a publicly traded company whose core business is buying, processing and marketing scrap metals and recyclable materials for domestic users and export markets.