Company acquires Y City Recycling to better control supply chain costs.
In a move that Axion International says will add a significant new revenue stream through vertical integration, the New Providence, N.J.-based company has acquired Y City Recycling, headquartered in Zanesville, Ohio. Axion is a manufacturer of recycled plastics products, such as Ecotrax rail ties and Struxure building products. Following the acquisition, Axion has renamed the new operations Axion Recycled Plastics Inc.
Key employees and members of Y City Recycling’s management team have been hired by Axion Recycled Plastics. Axion acquired the assets by the assumption of bank debt. Three of Axion’s largest investors made a $3 million capital infusion for the repayment of certain liabilities, for the future purchase and maintenance of equipment needed for increasing capacity and for working capital. An additional $2.5 million revolving credit facility, which includes the availability of letters of credit, has been put in place.
“This acquisition creates value for Axion in three key ways. First, it gives us added revenue. Second, it eliminates steps in our material supply chain, thereby stabilizing our raw material costs. Third, it enhances our quality control as we now process our own material for production,” says Steve Silverman, Axion president and CEO.
“Through this upstream vertical integration, we believe we will enhance our consolidated gross margins and capture market share in the recycling business by positioning Axion Recycled Plastics as a significant regional recycled materials processor and supplier in the Midwest and Southwest,” Silverman adds.
Axion Recycled Plastics recycles postconsumer and postindustrial plastics including HDPE (high-density polytheylene), PP (polypropylene), PVC (polyvinyl chloride), TPO (thermoplastic olefin) and PS (polystyrene) in many forms. The newly acquired company sorts, grinds, washes, blends and pelletizes plastic for future use. In addition, the company offers toll recycling services.
Along with the Zanesville facility, Axion will continue to operate its facility in Waco, Texas, which will supply material to produce the Ecotrax and Struxure.