Pittsburgh, 9 October (Argus) — UK recycler Unimetals’ deal to buy Sims Metal’s UK scrap business could be in jeopardy because it has not yet secured funding to complete the acquisition, sources familiar with the situation told Argus.
Unimetals agreed to buy all 28 of Sims’ UK sites, including four metal shredders and three port facilities, for £195mn ($249mn) in August 2024.
The company’s final payment of about £54mn ($74mn) was due 30 June, according to Sims’ annual report and currency conversions from Australian dollars. But Unimetals faced unfavorable seaborne markets early this year as excess scrap and steel supply outweighed demand, and did not meet the deadline, according to Sims’ annual report.
Sims agreed to delay the payment until its fiscal year 2026, which began in July, so that Unimetals could refinance its funding arrangements, Sims said on its August earnings call.
Unimetals has not yet been able to finance the acquisition, however, putting the deal in doubt, multiple sources told Argus this month.
Unimetals declined to comment.
Unimetals offloaded some of the sites to raise cash and leased them back soon after the initial deal with Sims was agreed to, according UK Companies House filings.
Unimetals is paying a high interest rate to its main US lender, multiple sources said. Some of its suppliers have started selling to other UK recyclers of late because of concerns about the company, sources said. But the company recently reassured staff that it was on track to complete the refinancing, according to an internal memo.
Uncertainty over Unimetals’ ability to complete the transaction caused Sims to take a £17mn ($24mn) loss allowance, according to Sims’ annual report released in September, which signals the company may not be able to collect on the debt.
Unimetals may have sought funding from the UK’s £2.5bn steel wealth fund, sources said. The incumbent Labour party pledged the investment in July 2024 to revive the country’s flagging steelmaking sector.
Sims, headquartered in Australia, could re-take ownership of the UK scrap yards and port assets if Unimetals cannot finance the deal, sources said. Sims may then seek to sell the assets to another bidder if the company still prefers to sell the scrap yards.
Sims declined to comment.
If Unimetals’ purchase of Sims’ UK segment does not close, it could elicit bids from opportunistic buyers looking to snap up the assets at a low cost, sources noted.
By James Marshall, Colin Richardson and Brad MacAulay
