Owner of local scrap giant Miller Compressing may buy another major Milwaukee scrap business

The assets of a major Milwaukee scrap metal business that has run into financial trouble may be purchased by a Missouri firm that already owns 18 scrap yards in Wisconsin.

The parent company of United Milwaukee Scrap LLC and four other subsidiaries has sought protection from creditors in receivership, a bankruptcy-like proceeding in state court.

The six related entities operate several facilities in Milwaukee and one near Minneapolis that together employ 116 people, documents filed in Milwaukee County Circuit Court say.

The companies process scrap metal generated by industry, plant demolitions and other sources. The Milwaukee operations include scrap yards on the north side at 3232 W. Fond du Lac Ave. and 3100 W. Concordia Ave.

United Milwaukee Scrap, corporate parent UMS Holdings LLC and the other subsidiaries “are experiencing financial difficulty and are not able to pay their debts as they come due,” according to a court filing.

Last March, the companies retained Chicago-based investment banking firm Livingstone Partners LLC to help sell their assets. Livingstone pitched 130 potential buyers, with four of them going so far as to sign confidentiality agreements, receive detailed financial information and meet with UMS management.

A potential sale deal was struck last week with Alter Trading Corp., of St. Louis. The agreement calls for Alter to buy the tangible property of UMS for $6.1 million plus the market value of its scrap inventory as of the closing date.

Alter would continue the UMS operations and hire “substantially all” the employees.

Alter already has extensive holdings in Wisconsin’s scrap metal industry. Many were acquired through acquisition, most notably the 2012 purchase of Miller Compressing Co.

Miller, located in Milwaukee’s Menomonee Valley, had said it was the 12th-largest scrap processor in the U.S.

At the time of the sale, United Milwaukee Scrap co-owner Art Arnstein said his company’s local facilities covered more than 30 acres and employed 160 people.

"For the large scrap yards in the Milwaukee area, it's really us and Miller," Arnstein said at the time. "The rest are smaller operations and don't have the capability of investing the amount of money it takes to run a business of this nature."

Besides the former Miller Compressing business, Alter’s holdings include scrap yards in Madison, Green Bay, Racine, Eau Claire, La Crosse, Janesville, Wausau and other cities, and a self-service auto salvage yard at 3520 W. Mill Road in Milwaukee.

Whether Alter’s presence here grows still larger will depend on what happens in court. A proposed order appointing Madison attorney Rebecca DeMarb as receiver is pending before Circuit Judge David Swanson, online court records indicate.

DeMarb also has asked Swanson to approve procedures for an auction of the UMS assets. If the auction goes forward, Alter Trading would be the so-called stalking horse bidder. If someone else should outbid Alter for the UMS assets, the St. Louis company would receive a $750,000 breakup fee.

In addition to its Wisconsin operations, Alter has more than 40 scrap yards in seven other states, according to the company website.

Documents filed in court so far do not say how much UMS owes its creditors. BMO Harris Bank and Associated Bank hold secured liens on all the company’s assets, according to a court filing. Wells Fargo bank also asserts it has a secured claim against United Milwaukee Scrap, the filing says.

Contact Rick Romell at (414) 224-2130 or rick.romell@jrn.com. Follow him on Twitter at @RickRomell.