PIONEER RECYCLING SERVICES
In December 2014, we formed a new entity, Pioneer Recycling Services (“PRS”) to acquire two material recovery facilities (“MRF’s”) from SP Fiber, a large pulp and paper company based in Georgia. MRF’s receive comingled recyclable material, mostly from residential waste haulers, and separate and bale the different materials for sale to end users. SP Fiber was in the process of selling off all of their MRF’s (approximately 16 in total), as they were no longer strategic assets. The two MRF’s we acquired, one in Tacoma and one outside Portland, were the largest and final two MRF’s to be divested.
Our investment thesis was that because the previous owner, SP Fiber, had operated the facilities as cost centers with a primary emphasis on sourcing recycled paper for SP Fiber’s paper mill in Oregon, there were numerous profit improvement opportunities. Also, the fact that the incoming management team was willing to invest a significant percentage of their personal net worth along side Socius gave us comfort in their commitment and confidence in the business.
Similar to other Socius transactions, the management team invested in common securities and we and our institutional partner invested in all of the preferred and subordinated debt. Given the amount of capital invested by the management team, they were able to retain a controlling interest in Pioneer.