METAL MANAGEMENT INC, S-3, 1997-12-30

METAL MANAGEMENT INC
S-3, 1997-12-30
MISC DURABLE GOODS

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<PAGE> 1
As filed with the Securities and Exchange Commission on December 29, 1997.
Registration No. 333-_________

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------------------

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
METAL MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)

Delaware 94-2835068
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

500 North Dearborn Street, Suite 405
Chicago, Illinois 60610
(312) 645-0700
(Address including zip code, and telephone number, including area code,
of registrant's principal executive offices)

------------------------------------

GERARD M. JACOBS
Chief Executive Officer
METAL MANAGEMENT, INC.
500 North Dearborn Street, Suite 405
Chicago, Illinois 60610
(312) 645-0700
(Name and address, including zip code, and telephone number,
including area code, of agents for service)

With a Copy to:
MICHAEL J. CHOATE, ESQ.
SHEFSKY & FROELICH LTD.
444 North Michigan Avenue, Suite 2500
Chicago, Illinois 60611
(312) 527-4000

------------------------------------

Approximate date of commencement of proposed
sale to the public: As soon as practicable after this
Registration Statement has become effective.

------------------------------------

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|

If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 (the "Securities Act"), other than securities offered
only in connection with dividend or interest reinvestment plans, check the
following box. |X|

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|

If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.
|_|

If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. |_|

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
================================================================================================================================
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER SHARE (1) AGGREGATE OFFERING PRICE(1) REGISTRATION FEE(1)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK, PAR VALUE
$0.01 PER SHARE 15,352,779 $15.09 $231,673,435 $68,344

================================================================================================================================
</TABLE>

(1) PURSUANT TO RULE 457(C), SOLELY FOR THE PURPOSE OF CALCULATING THE
AMOUNT OF THE REGISTRATION FEE. THE AVERAGE OF THE HIGH AND LOW
PRICES REPORTED ON THE NASDAQ STOCK MARKET WAS $15.09 ON
DECEMBER 19, 1997.

(2) THIS REGISTRATION STATEMENT ALSO RELATES, TO THE EXTENT PERMITTED BY
RULE 416, TO AN INDETERMINATE AMOUNT OF SHARES OF COMMON STOCK ISSUABLE
UPON CONVERSION OF CERTAIN PREFERRED SHARES AND THE EXERCISE OF
WARRANTS DESCRIBED HEREIN TO PREVENT DILUTION RESULTING FROM STOCK
SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS OR BY REASON OF CHANGES IN
THE CONVERSION PRICE OF THE PREFERRED SHARES IN ACCORDANCE WITH THE
TERMS OF THE CERTIFICATE OF DESIGNATION GOVERNING THE PREFERRED SHARES
OR THE EXERCISE PRICE OF THE WARRANTS IN ACCORDANCE WITH THE DOCUMENTS
GOVERNING EACH WARRANT.

The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE.

PROSPECTUS SUBJECT TO COMPLETION DECEMBER 29, 1997

15,352,779 SHARES

METAL MANAGEMENT, INC.

COMMON STOCK

This Prospectus relates to the resale of up to an aggregate of
15,352,779 shares (the "Shares") of common Stock, par value $.01 per share (the
"Common Stock"), of Metal Management, Inc., a Delaware corporation (the
"Company"), which may be offered (the "Offering") for sale by persons
(individually a "Selling Stockholder," collectively the "Selling Stockholders")
described in this Prospectus. The Shares that were issued, or are issuable by
the Company consist of the following: (i) 6,185,296 Shares issued by the Company
in connection with business combination transactions; (ii) 2,055,673 Shares
issuable upon exercise of warrants granted by the Company in business
combination transactions or to employees, advisors or other agents of the
Company; (iii) up to 2,614,331 Shares issuable on conversion of 23,000 shares of
Series A Convertible Preferred Stock (the "Series A Preferred Stock") by the
holders of such Series A Preferred Stock; (iv) up to 1,939,998 Shares issuable
upon conversion of 20,000 shares of Series B Convertible Preferred Stock (the
"Series B Preferred Stock") by the holders of such Series B Preferred Stock; (v)
1,885,000 Shares owned by individuals who purchased such Shares in other
transactions exempt from the registration requirements of federal and state law;
and (vi) 672,481 Shares which are not otherwise covered by (i)-(v) above.

The Shares may be offered for sale from time to time by or for the
account of the Selling Stockholders or their respective pledgees, donees,
transferees or other successors in interest in the open market, on the Nasdaq
National Market, in the over-the-counter market, in privately negotiated
transactions, or a combination of these methods, at market prices prevailing at
the time of sale, at prices related to the prevailing market prices or at
negotiated prices. The Shares are intended to be sold through one or more
broker-dealers or directly to purchasers. These broker-dealers may receive
compensation in the form of commissions, discounts or concessions from the
Selling Stockholders or purchasers of the Shares for whom the broker-dealer may
act as agent, or to whom the Selling Shareholders may sell as principal, or both
(which compensation as to a particular broker-dealer may be in excess of
customary concessions). The Selling Stockholders and any broker-dealers who act
in connection with the sale of the Shares hereunder may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act") and any commissions received by them and the proceeds of any
resale of the Shares may be deemed to be underwriting discounts and commissions
under the Securities Act.

Of the 15,352,779 Shares offered hereby, a total of: (i) 8,742,777
Shares are presently outstanding; (ii) 2,055,673 Shares are issuable upon
exercise of warrants; and (iii) up to 4,554,329 Shares are issuable upon
conversion of the Series A Preferred

<PAGE> 3

Stock and Series B Preferred Stock. The conversion price of the Series A
Preferred Stock is equal to the lesser of (A) the price determined by
multiplying (x) the average of the "Closing Bid Prices" (as defined in the
Certificate of Designation for the Series A Preferred Stock) for the five (5)
trading days immediately prior to (but not including) the purchase date times
(y) 85%; and (B) $18.30. The conversion price for the Series B Preferred Stock
is equal to the lesser of: (A) the price determined by multiplying (x) the
average of "Closing Bid Price" (as defined in the Certificate of Designation
for the Series B Preferred Stock) for the Common Stock on the five (5) trading
days occurring immediately prior to, but not including, the date of conversion
times (y) 92.5%; (B) the price determined by multiplying (x) the "Closing Bid
Price" for the Common Stock for the five (5) trading days immediately prior to
(but not including) the purchase date of the Series B Preferred Stock times (y)
120%; or (C) the price equal to the lowest traded price of a share of Common
Stock during any period in which the Common Stock is no longer listed for
quotation on the Nasdaq National Market, the New York Stock Exchange or such
other national securities exchange. The exercise price and the number of shares
issuable upon exercise of warrants or conversion of the Series A or Series B
Preferred Stock (and offered for sale pursuant to this Prospectus) are subject
to adjustment to the extent permitted under Rule 416 of the Securities Act to
prevent dilution resulting from stock splits, stock dividends or similar
events, or by reason of changes in the conversion price in accordance with the
terms of the certificate of designation governing the Series A or Series B
Preferred Stock. If all of the warrants referred to in (ii) above are
exercised, the Company will receive proceeds of $11,342,249 although in certain
instances the documents governing the warrants permit the holder thereof to
exercise the warrants in a "cashless" manner. A "cashless" exercise will reduce
the number of shares ultimately issued but will also reduce the proceeds
payable to the Company from such issuance. The Company will receive no portion
of the proceeds from the sale of the Shares offered hereby and will bear
certain expenses incident to their registration. See "Selling Stockholders" and
"Plan of Distribution."

The Common Stock is currently traded on The Nasdaq Stock Market --
National Market ("Nasdaq") under the symbol "MTLM." On December 26, 1997, the
last reported price for the Common Stock as reported by Nasdaq was $16.13 per
share. As of December 29, 1997, the Company had a total of 29,685,653 shares of
Common Stock outstanding.

PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS
SET FORTH UNDER THE CAPTION "RISK FACTORS" BEGINNING ON
PAGE 9 OF THIS PROSPECTUS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COM-
MISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

December 29, 1997

<PAGE> 4

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder, and, in accordance therewith, files
reports, proxy and information statements and other information with the
Securities and Exchange Commission (the "Commission"). These reports, proxy and
information statements and other information concerning the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; and at
the Commission's regional offices located at Citicorp Center, Suite 1400, 500
West Madison Street, Chicago, Illinois 60661 and at Seven World Trade Center,
Suite 1300, New York, New York, 10048. Copies of such material can also be
obtained from the Commission at prescribed rates through its Public Reference
Section at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also
maintains a site on the World Wide Web at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The Common Stock is
currently traded on Nasdaq. Information filed by the Company with Nasdaq may be
inspected through EDGAR, the Commission's on-line filing service.

The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act with respect to the Shares offered hereby
(including all amendments and supplements thereto, the "Registration
Statement"). This Prospectus, which forms a part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement,
certain parts of which have been omitted in accordance with the rules and
regulations of the Commission. Statements contained herein concerning the
provisions of certain documents are not necessarily complete and, in each
instance, reference is made to the copy of such document filed as an exhibit to
the Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference. The Registration
Statement and the exhibits thereto can be inspected and copied through EDGAR,
the Commission's on-line filing service.

<PAGE> 5

THE COMPANY

GENERAL

The Company and its wholly-owned subsidiaries are engaged in the
business of dismantling, processing, marketing, brokering and recycling both
ferrous and non-ferrous metals with the goal of becoming one of the largest
recyclers of scrap metal in North America. The Company operates, or participates
in joint ventures operating, thirty-seven recycling centers in ten states and
resells processed scrap metal and other materials to domestic and foreign
customers. The Company intends to continue its expansion principally through
acquisitions. The Company believes that the scrap metal recycling industry is
highly fragmented, and that no single company is a significant processor of
scrap metal on a national scale, although certain companies are significant
processors on a local or regional scale.

The Company entered the scrap metal recycling industry on April 11,
1996, through its merger with EMCO Recycling Corp. ("EMCO"), headquartered in
Phoenix, Arizona. As part of the strategic redirection, in April 1996 management
announced plans to exit its Spectra*Star printer and consumables business. On
July 16, 1996, the inventory and related production equipment of this business
was sold for approximately $1.3 million in cash and an agreement by the
purchaser to pay the Company a percentage of revenues royalties on future sales
of Spectra*Star printers and related consumables. The Company discontinued and
sold its VideoShow and related products lines business ("VideoShow") in December
1996 for consideration substantially in the form of royalties on future sales of
VideoShow equipment in an amount which the Company does not expect will be
material.

The Company was founded in 1981 and re-incorporated in Delaware in June
1986. Prior to April 11, 1996, the Company was called General Parametrics
Corporation. On April 9, 1996, the Company's stockholders approved an amendment
to its Certificate of Incorporation to change the name to Metal Management, Inc.
Effective April 15, 1996, the Company changed its Nasdaq Stock symbol to "MTLM".
On April 25, 1996, the Board of Directors of the Company approved a change in
the Company's fiscal year-end from October 31 to March 31, effective April 1,
1996.

RECENT DEVELOPMENTS
The Company has recently completed a number of acquisitions
which are summarized below (the "Completed Acquisitions").

- COZZI. Cozzi Iron & Metal, Inc. ("Cozzi") was founded in 1945
by the Cozzi family. Cozzi is headquartered in Chicago,
Illinois and has a network of processing facilities located in
Chicago, Illinois; East Chicago, Indiana; and the Pittsburgh,
Pennsylvania area as well as joint venture interests (50%) in
entities operating in Memphis, Tennessee and Phoenix, Arizona.
The Company completed the acquisition of Cozzi on December 1,
1997. Cozzi acquired all of the stock of Kankakee Scrap
Corp., Kankakee, Illinois ("Kankakee"), on December 18, 1997.

<PAGE> 6

- PROLER. Proler Southwest Inc. and Proler Steelworks L.L.C.
(collectively, "Proler"), were founded in 1992 and 1994,
respectively, principally by William and Ronald Proler. Proler
operates a facility in Houston, Texas and a site in Jackson,
Mississippi. The Company completed the acquisition of Proler
on August 28, 1997.

- THE ISAAC GROUP. The Isaac group of companies (collectively,
"Isaac"), founded in 1899 by the Isaac family, operates four
processing facilities located in Defiance, Bryan, Cleveland
and Dayton, Ohio. The Company completed the acquisition of
Isaac on June 23, 1997.

- RESERVE IRON & METAL, L.P. Reserve Iron & Metal, L.P.
("Reserve"), founded in 1978 and acquired in 1990 by the
Joseph family, operates two processing facilities located in
Cleveland, Ohio and Chicago, Illinois and has a 50% interest
in a joint venture which operates a processing facility
located in Attalla, Alabama. The Company completed the
acquisition of Reserve on May 1, 1997.

- HOUTEX METALS COMPANY, INC. HouTex Metals Company, Inc.
("HouTex"), founded in 1979 by the Melnik family, operates one
processing facility on the Houston Ship Channel. The Company
completed the acquisition of HouTex on January 7, 1997.

- THE MACLEOD GROUP. The "MacLeod Group" of companies
("MacLeod"), founded in 1969 by Ian MacLeod, operates four
processing facilities in Southern California. The Company
completed the acquisition of MacLeod on January 1, 1997.

- EMCO RECYCLING CORP. EMCO Recycling Corp. ("EMCO"), formed in
1993 by the combination of three companies, Empire Metals,
Inc., Valley Steel and Copperstate Metals, Inc., operates
processing facilities at ten sites in Phoenix, Arizona and two
other sites in the State of Arizona. The Company completed the
acquisition of EMCO on April 11, 1996.

From time to time the Company engages in discussions with third parties
regarding potential acquisitions of companies or businesses in the same or
substantially similar lines of business as the Company. If the parties are able
to agree generally on the nature, terms and conditions of a transaction,
including the purchase price and form of consideration, a letter of intent is
prepared to reflect this understanding. In many cases, these letters of intent
are structured as "binding intents" to purchase the business, although each
letter is still subject to a number of terms and conditions including but not
limited to negotiation and execution of definitive purchase agreements. In
addition, each potential acquisition may be subject to additional contingencies
specific to that acquisition. There can be no assurance that any such potential
acquisition will result in execution of a definitive agreement or that these
acquisition(s) will be completed on terms and conditions acceptable to the
Company, if at all. The Company

<PAGE> 7

has entered into letters of intent to purchase the companies or businesses
described below (the "Potential Acquisitions"):

- SUPERIOR FORGE, INC. The Company entered into a binding letter
of intent on July 23, 1997 to acquire Superior Forge, Inc.
("Superior"). Superior, founded and owned by Ian Albert, uses
and generates aluminum and aluminum scrap in its forging
operations, located in Huntington Beach, California.

- HOUSTON COMPRESSED STEEL CORPORATION. The Company entered into
a letter of intent on August 1, 1997 to acquire Houston
Compressed Steel Corp. ("HCS"). HCS, owned by the Segal
family, operates one processing facility in Houston, Texas.

- SALT RIVER RECYCLING, L.L.C. The Company entered into a
binding letter of intent on August 4, 1997 to purchase Newell
Phoenix, L.L.C.'s 50% membership interest in Salt River
Recycling, L.L.C. ("Salt River"), an Arizona limited liability
company with one facility in Phoenix, Arizona. The Company
currently owns a 50% interest in Salt River.

- GOLDIN INDUSTRIES, INC. The Company entered into a binding
letter of intent on August 5, 1997 to acquire certain scrap
metal operations and assets of Goldin Industries, Inc., Goldin
Industries Louisiana, Inc. and Goldin of Alabama, Inc.
("Goldin"). Goldin, founded and owned by the Goldin family,
operates five processing facilities, including two in
Gulfport, Mississippi, one in Harvey, Louisiana and two in
Mobile, Alabama.

- PERLCO, L.L.C. The Company entered into a binding letter of
intent on August 6, 1997 to acquire: (i) FPX, Inc. ("FPX"),
which has a 50% ownership interest in PerlCo, L.L.C.
("PerlCo"), a Tennessee limited liability company with one
facility in Memphis, Tennessee; and (ii) Southern Tin Compress
Corporation ("Southern Tin"), which owns the real estate and
certain equipment associated with the PerlCo operations. The
Company currently owns a 50% interest in PerlCo.

- AEROSPACE METALS. The Company entered into a binding letter of
intent on August 28, 1997 to purchase substantially all of the
assets and business of, and to lease the real property used
by, Aerospace Metals, Inc., Aerospace Parts Security, Inc. and
The Suisman Titanium Corporation (collectively, "Aerospace").
Aerospace, founded and owned by Michael Suisman, operates one
facility located in Hartford, Connecticut.

- ATLAS RECYCLING LIMITED PARTNERSHIP. The Company entered into
a binding letter of intent on August 28, 1997 to purchase all
of the scrap metal related business operations and assets of
Atlas Recycling Limited Partnership ("Atlas"). Atlas

<PAGE> 8

operates two processing facilities in Texas, including one in
Corpus Christi and one outside of Del Rio.

- YONACK IRON & METAL CO. The Company entered into a binding
letter of intent on August 28, 1997 to acquire all of the
scrap metal related business operations and assets of Yonack
Iron & Metal Co. ("Yonack Iron"). Yonack, owned by Robert P.
Yonack, operates five processing facilities, including four in
Dallas, Texas and one in Lonoke, Arkansas.

- YONACK SERVICES, INC. The Company entered into a binding
letter of intent on August 28, 1997 to acquire all of the
scrap metal related business operations and assets of Yonack
Services, Inc. ("Yonack Services"), a Texas corporation.
Yonack Services operates one processing facility located in
Forney, Texas.

- GOLD METAL RECYCLERS, INC. The Company entered into a binding
letter of intent on August 28, 1997 to acquire all of the
scrap metal related business operations and assets of Gold
Metal Recyclers, Inc. ("Gold"), a Texas corporation. Gold,
owned by Kenneth E. Goldberg and Neil A. Goldberg, operates
one processing facility located in Dallas, Texas.

- SPECTRUM METAL RECYCLING. The Company entered into a binding
letter of intent on August 28, 1997 to acquire all of the
scrap metal related business operations and assets of GMY
Corp., d/b/a Spectrum Metal Recycling ("Spectrum"), a Texas
corporation. Spectrum operates one processing facility located
in Houston, Texas.

- ACCURATE IRON & METAL CO. The Company entered into a binding
letter of intent on December 11, 1997 to purchase
certain assets of Accurate Iron & Metal Co., an Illinois
corporation, headquartered in Franklin Park, Illinois.

- 138 SCRAP INC. The Company entered into a letter of intent on
December 12, 1997 to purchase substantially all of the assets
of 138 Scrap Inc. and of Katrick Inc., Illinois corporations
headquartered in Riverdale, Illinois.

The Company has recently completed a $25,000,000 private equity
placement to an affiliate of investor Sam Zell. In the transaction, Samstock,
L.L.C., ("Samstock") an affiliate of Sam Zell's Equity Group Investments, Inc.,
received 1,470,588 shares of the Company's common stock, and warrants to
purchase an additional 400,000 shares of common stock at $20 per share and
200,000 shares at $23 per share. The warrants are subject to mandatory
exercise under certain circumstances. In addition to the equity investment,
Rod Dammeyer of Equity Group Investments, Inc. will join the Company's Board of
Directors.

The Common Stock is traded on the Nasdaq Stock Market under the trading
symbol "MTLM." The Company's principal executive offices are located at 500
North Dearborn Street, Suite 405, Chicago, Illinois 60610, and its telephone
number is (312) 645-0700.

<PAGE> 9

RISK FACTORS

An investment in the Shares being offered hereby involves a significant
degree of risk. In addition to the other information set forth in this
Prospectus, prospective purchasers of the Shares should consider carefully the
following factors which may adversely affect the business, financial condition,
results of operations and future prospects of the Company, and the prevailing
market price and performance of the Company's Common Stock. Certain statements
and information contained or incorporated by reference herein constitute
"forward-looking statements" within the meaning of the Federal Private
Securities Litigation Reform Act of 1995. These forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by these forward-looking statements.

Inability to Control or Manage Growth or to Successfully Integrate
Acquired Businesses. The Company intends to actively pursue acquisitions and
mergers in the scrap metal recycling industry. There can be no assurance that
the Company will be successful in acquiring other entities or that it will be
able to effectively manage these acquired entities. The Company's ability to
achieve its expansion objectives and to manage its growth effectively depends on
a variety of factors, including the ability to identify appropriate acquisition
targets and to negotiate acceptable terms for their acquisition, the integration
of new businesses into the Company's operations, the achievement of cost savings
and the availability of capital. The inability to control or manage growth
effectively or to successfully integrate future new businesses into the
Company's operations would have a material adverse effect on the Company's
results of operations and financial condition. Depending on the nature and size
of these transactions, if any, the Company may experience working capital and
liquidity shortages. There can be no assurance that additional financing will be
available on terms and conditions acceptable to the Company, if at all.

Recent Change in Strategic Direction and Limited Operating History. The
Company has undergone a significant change in strategic direction and emphasis
in the last twelve to eighteen months. Given this substantial change, past
financial performance should not be considered a reliable indicator of future
performance and historical trends should not be used to anticipate results or
trends in future periods. Prior to the merger with EMCO in April 1996, the
Company had no history of operations in the scrap metal recycling industry. Due
to the limited experience of management in effecting a consolidation strategy,
there can be no assurance that the Company will be able to successfully effect
its strategy even if the Company is able to acquire other entities on acceptable
terms and conditions. In addition, until being acquired by the Company, none of
the Completed Acquisitions, the Potential Acquisitions nor, in some cases,
potential future acquisitions have or will have previously operated as
subsidiaries of a public holding company subject to formal accounting and
reporting requirements. The Company will be required to continue devoting
additional management time and capital to enhance information systems and to
improve and monitor internal controls, as well as to recruit managers with
appropriate skills to insure the timeliness and accuracy of financial reports.
Further, the Company's management has limited experience in executing
consolidation strategies on the scale being pursued by the

<PAGE> 10

Company. The success of the consolidation strategy depends in part on the
ability of the Company's management to oversee diverse operations and to
successfully integrate processing, marketing and other resources.

Inability to Complete Potential Acquisitions. From time to time the
Company engages in discussions with third parties regarding potential
acquisitions of companies or businesses in the same or substantially similar
lines of business as the Company. If the parties are able to agree generally on
the nature, terms and conditions of a transaction, a letter of intent is
prepared to reflect this understanding. In many cases, these letters of intent
are structured as "binding intents" to purchase the business, although each
letter is still subject to a number of terms and conditions including but not
limited to negotiation and execution of definitive purchase agreements. In
addition, each potential acquisition may be subject to additional contingencies
specific to that acquisition. There can be no assurance that any such potential
acquisition will result in execution of a definitive agreement or that such
acquisition will be completed on terms and conditions acceptable to the Company,
if at all.

Lack of Capital and Leverage. Implementing the Company's aggressive
acquisition strategy requires substantial amounts of capital. For example, to
complete the Potential Acquisitions, the Company needs to fund the cash portions
of the purchase considerations, approximately $44.1 million. There can be no
assurance that sufficient funds for these acquisitions will become available on
acceptable terms, if at all. Failure to raise sufficient capital when required
or needed could adversely affect the Company's results of operations and
financial condition.

The Company intends to continue its strategy of financing its
acquisitions in part by incurring indebtedness to sellers of acquired entities.
This may require the Company to agree to certain restrictions on its operations
which may adversely effect the Company's ability to integrate the acquired
entities into the Company's structure. For example, in connection with the
Proler, Isaac and Reserve acquisitions, the Company incurred short-term
indebtedness to the sellers of these entities. This indebtedness restricts the
Company's ability to unilaterally direct or control the operations of Proler,
Isaac or Reserve until the notes are repaid. Failure to repay these notes or
similar notes that the Company may issue in the future would have a material
adverse effect on the Company's results of operations and financial condition
and could cause the Company to cede control in or ownership of the acquired
entity. As of September 30, 1997, the Company had approximately $154.7 million
of total liabilities, including approximately $48.6 million of indebtedness owed
in connection with the acquisitions of MacLeod, Reserve, Isaac and Proler. The
degree to which the Company is leveraged could have adverse consequences to the
Company including the following: (i) the Company's ability to obtain additional
financing in the future for working capital, capital expenditures, acquisitions,
general corporate purposes or other purposes may be impaired; (ii) a substantial
portion, if not all, of the Company's cash flow will be required to pay
principal and interest; and (iii) the Company will be more vulnerable to an
economic downturn in the scrap metal recycling industry which has historically
been sensitive to changes in general economic conditions.

<PAGE> 11

Comprehensive Regulatory Requirements. The Company is subject to
significant government regulation including stringent environmental laws and
regulations. Among other things, these laws and regulations impose comprehensive
local, state, federal, foreign and supranational statutory and regulatory
requirements concerning, among other matters, the treatment, acceptance,
identification, storage, handling, transportation and disposal of industrial
by-products, hazardous and solid waste materials, waste water, storm water
effluent, air emissions, soil contamination, surface and ground water pollution,
employee health and safety, operating permit standards, monitoring and spill
containment requirements, zoning, and land use, among others. Various laws and
regulations set prohibitions or limits on the release of contaminants into the
environment. Such laws and regulations also require permits to be obtained and
manifests to be completed and delivered in connection with any shipment of
prescribed materials so that the movement and disposal of such material can be
traced and the persons responsible for any mishandling of such material can be
identified. This regulatory framework imposes significant compliance burdens,
costs and risks on the Company. Violation of such laws and regulations may give
rise to significant liability to the Company, including fines, damages, fees and
expenses.

Releases of certain industrial by-products and waste materials are
subject to particular laws and regulations. Although the specific provisions of
laws and regulations related to such releases vary among jurisdictions, such
laws and regulations typically require that the relevant authorities be notified
promptly, that the release be cleaned up promptly, and that remedial action be
taken by the responsible party and/or owner of the site to restore the
environment to levels protective of human health and the environment. Generally,
the governmental authorities are empowered to act to clean up and remediate
releases and environmental damage and to charge the costs of such cleanup to one
or more of the owners of the property, the person responsible for the spill, the
generator of the contaminant and certain other parties or to direct the
responsible party to take such action. These authorities may also impose a tax
or other liens to secure the parties' reimbursement obligations. Environmental
laws and regulations impose strict operational requirements on the performance
of certain aspects of hazardous or toxic substances remedial work. These
requirements specify complex methods for identification, monitoring, storage,
treatment and disposal of waste materials managed during a project. Failure to
meet these requirements could result in substantial fines and other penalties.

Environmental legislation and regulations have changed rapidly in
recent years, and it is likely that the Company will be subject to even more
stringent environmental standards in the future. For example, the ultimate
effect on the Company of the regulations to be implemented under the Clean Air
Act Amendments of 1990 (the "Clean Air Act"), and the actual amount of any
capital expenditures required thereby, will depend on how the Clean Air Act is
interpreted and implemented pursuant to regulations that are currently being
developed and on additional factors such as the evolution of environmental
control technologies and the economic viability of these technologies. For
these reasons, future capital expenditures for environmental control facilities
cannot be predicted with accuracy; however, one may expect that environmental
control standards will become increasingly stringent and that the expenditures
necessary to comply with them could increase substantially.

<PAGE> 12

Local, state, federal, foreign and supranational governments and
agencies have also from time to time proposed or adopted other types of laws,
regulations or initiatives with respect to the scrap metal recycling industry,
including laws, regulations and initiatives intended to ban or restrict the
intrastate, interstate or international shipment of wastes, to impose higher
taxes or fees on certain shipments of waste, or to classify or reclassify
certain categories of non-hazardous wastes as hazardous. Certain local, state,
federal, foreign and international governments and agencies have promulgated
"flow control" or other regulations, which attempt to require that all waste
(or certain types of waste) generated within the jurisdiction in question must
go to certain disposal sites. From time to time legislation is considered that
would enable or facilitate such laws, regulations or initiatives. Due to the
complexity of regulation of the industry and to public and political pressure,
implementation of existing or future laws, regulations or initiatives by
different levels of governments may be inconsistent and are difficult to
foresee.

The Company requires, and must comply with, various permits and
licenses to conduct its operations. Government agencies continually monitor
compliance with these permits or licenses and the Company's facilities are
subject to periodic unannounced inspection by local, state and federal
authorities. Violations of any permit or license, if not remedied, could result
in the Company incurring substantial fines, suspension of operations or closure
of a site.

Governmental authorities have a wide variety of powerful administrative
enforcement actions and remedial orders available to cause compliance with
environmental laws or to remedy or punish violations of such laws. Such orders
may be directed to various parties, including present or former owners or
operators of the concerned sites, or parties that have or had control over the
sites. In certain instances, fines and treble damages may be imposed. In the
event that administrative actions fail to cure a perceived problem or where the
relevant regulatory agency so desires, an injunction or temporary restraining
order or damages may be sought in a court proceeding. Some laws give private
parties the right, in addition to existing common laws claims, to file claims
for injunctive relief or damages against the owners or operators of the site.

The Company believes that with heightened legal, political and citizen
awareness and concerns, all companies in the scrap metal recycling industry may
be faced, in the normal course of operating their businesses, with fines and
penalties and the need to expend substantial funds for capital projects,
remedial work and operating activities, such as environmental contamination
monitoring, soil removal, groundwater treatment, creation of engineered
barriers, establishing institutional controls and related activities. Regulatory
or technological developments relating to the environment may require companies
engaged in the scrap metal recycling industry to modify, supplement or replace
equipment and facilities at costs which may be substantial. Because the scrap
metal recycling industry has the potential for discharge of materials into the
environment, a material portion of the capital expenditures by the Company is
expected to relate, directly or indirectly, to such equipment and facilities.
Moreover, it is possible that future developments, such as increasingly strict
requirements of environmental laws and regulations, and enforcement policies
will require even more significant capital investments in this regard.

<PAGE> 13

Due to the nature of the scrap metal recycling business, it is possible
that inquiries or claims based upon environmental laws may be made in the future
by governmental bodies or individuals against the Company and any other scrap
metal recycling entities that the Company may acquire. The location of the
Company's facilities in large urban areas may increase the risk of scrutiny and
claims. The Company is unable to predict whether any such future inquiries or
claims will in fact arise or the outcome of such matters. Additionally, it is
not possible to predict the total size of all capital expenditures or the amount
of any increases in operating costs or other expenses that may be incurred by
the Company to comply with the environmental requirements applicable to the
Company and its operations, or whether these costs can be passed on to customers
through product price increases. Moreover, environmental legislation has been
enacted, and may in the future be enacted, to create liability for past actions
that were lawful at the time taken but that have been found to affect the
environment and to create public rights of action for environmental conditions
and activities. As is the case with scrap recyclers in general, if damage to
persons or the environment has been caused, or is in the future caused, by
hazardous materials activities of the Company, the Company may be fined and held
liable for such damage. In addition, the Company may be required to remedy such
conditions and/or change procedures. Thus, there can be no assurance that
potential liabilities, expenditures, fines and penalties associated with
environmental laws and regulations will not be imposed on the Company in the
future or that such liabilities, expenditures, fines or penalties will not have
a material adverse effect on the Company's results of operations and financial
condition.

In addition, public interest groups, local citizens, local
municipalities and other persons or organizations may have a right to seek
judicial relief for purported violations of law. In some jurisdictions, recourse
to the courts by individuals under common law principles such as trespass or
nuisance have been or may be enhanced by legislation providing members of the
public with statutory rights of action to protect the environment. In such
cases, even if a scrap metal recycling facility is operated in full compliance
with applicable laws and regulations, local citizens and other persons and
organizations may seek compensation for damages allegedly caused by the
operation of the facility. In some cases, the operation of scrap metal recycling
facilities is subjected to heightened public scrutiny because of residential or
other non-industrial property uses that have developed around such facilities.
So-called "Not In My Backyard" ("NIMBY") grass roots community opposition to
such facilities can materially interfere with such facilities' on-going
operations and growth.

Significant Potential Environmental Liability. The Company is subject
to potential liability and may also be required from time to time to clean up
or take certain remedial action with regard to sites currently or formerly used
in connection with its operations. Furthermore, the Company may be required to
pay for all or a portion of the costs to clean up or remediate sites the
Company never owned or on which it never operated if it is found to have
arranged for transportation, treatment or disposal of pollutants or hazardous or
toxic substances on or to such sites. The Company also is subject to potential
liability for environmental damage that their assets or operations may cause
nearby landowners, particularly as a result of any contamination of drinking
water sources or soil, including damage resulting from conditions existing prior
to the acquisition of such assets or operations. Any substantial liability for

<PAGE> 14

environmental damage could materially adversely affect the operating results and
financial condition of the Company, and could materially adversely affect the
marketability and price of the Company's stock.

Incompleteness of Site Investigations. As part of its pre-transaction
"due diligence" investigations, the Company typically hires an environmental
consulting firm to conduct transaction screen reviews, or Phase I and/or Phase
II site assessments of the sites owned or leased by particular acquisition or
merger candidates (the "Pre-Transaction Site Assessments"). However, such
Pre-Transaction Site Assessments have not covered (and will not in the future
cover) all of the sites owned or leased by the companies which are acquired by
or merge with the Company. Moreover, such Pre-Transaction Site Assessments which
have occurred have not been designed or expected (and will not in the future be
designed or expected) to disclose all material contamination or liability that
may be present. For example, the Company does not include soil sampling or core
borings as a standard part of its Pre-Transaction Site Assessments, even though
such sampling and core borings might increase the chances of finding
contamination on a particular site. Failure to conduct soil sampling and core
borings on a particular site could result in the Company failing to identify a
seriously contaminated site prior to an acquisition or merger, and could
materially adversely affect the Company.

Likelihood of Contamination at Some Sites. Pre-Transaction Site
Assessments of the Company's current sites conducted by independent
environmental consulting firms have revealed that some soil, surface water
and/or groundwater contamination is likely at certain of these sites, and have
recommended that certain additional investigations and remediation be conducted.
Based upon its review of these reports, the Company believes that it is likely
that contamination exists at certain of its sites and that it is likely that
additional investigation, monitoring and remediation will be required at some of
the sites. Also based upon its review of these reports, the Company believes
that such contamination is likely to include, but not be limited to:
polychlorinated biphenyls (PCBs); total petroleum hydrocarbons; volatile organic
compounds (VOCs); antimony; arsenic; cadmium; copper; lead; mercury; silver;
zinc; waste oil; toluene; meta-and para-xylenes; baghouse dust; and/or aluminum
dross. The ultimate extent of such contamination cannot be stated with any
certainty at this point, and there can be no assurance that the cost of
remediation will be immaterial. The existence of such contamination could result
in federal, state, local or private enforcement or cost recovery actions against
the Company, possibly resulting in disruption of Company operations, the need
for proactive remedial measures, and substantial fines, penalties, damages,
costs and expenses being imposed against the Company.

The Company expects to require future cash outlays as it incurs costs
relating to the remediation of environmental liabilities. The incurrence of
these costs may have a material adverse effect on the Company's results of
operation and financial condition.

Uncertain Costs of Environmental Compliance and Remediation. Many
factors affect the level of expenditures the Company will be required to make in
the future to comply with environmental requirements, including: (i) new local,
state and federal laws and regulations; (ii) the developing nature of
administrative standards promulgated under Superfund and other

<PAGE> 15

environmental laws, and changing interpretations of such laws; (iii) uncertainty
regarding adequate control levels, testing and sampling procedures, new
pollution control technology and cost benefit analysis based on market
conditions; (iv) the incompleteness of information regarding the condition of
certain sites; (v) the lack of standards and information for use in the
apportionment of remedial responsibilities; (vi) the numerous choices and costs
associated with diverse technologies that may be used in remedial actions at
such sites; (vii) the possible ability to recover indemnification or
contribution from third parties; and (viii) the time periods over which eventual
remediation may occur. The estimated costs, and the timing of such costs, for
future environmental compliance (capital expenditures or increases in operating
costs or other expenditures) and remediation cannot be accurately predicted and
are necessarily imprecise; however, such costs could be material to future
quarterly or annual results of operations of the Company. In addition, it is not
possible to predict whether or not such costs can be passed on to customers
through price increases.

Lack of Environmental Impairment Insurance. The Company does not carry
environmental impairment liability insurance. The Company operates under general
liability insurance policies which does not cover environmental damage. If the
Company were to incur significant liability for environmental damage not covered
by environmental impairment insurance, or for other claims in excess of its
general liability insurance and umbrella coverage, the Company's results of
operations and financial condition could be materially adversely affected.

Risks Associated With Certain By-Products. Although the majority of the
Company's metal products are currently exempt from applicable solid waste
regulations, the Company's scrap metal recycling operations produce significant
amounts of by-products. Heightened environmental risk is associated with certain
of these by-products. For example, certain of the Company's subsidiaries operate
shredders for which the primary feed materials are automobile hulks and obsolete
household appliances. Approximately 20% of the weight of an automobile hulk
consists of material (shredder fluff) which remains after the segregation of
ferrous and saleable non-ferrous metals. Federal environmental regulations
require shredder fluff to pass a toxic leaching test to avoid classification as
a hazardous waste. The Company endeavors to have hazardous contaminants removed
from the feed material prior to shredding and as a result the Company believes
the shredder fluff generated is properly not considered a hazardous waste.
Should the laws, regulations or testing methods change with regard to shredder
fluff disposal, the Company may incur additional significant expenditures.

Potential Superfund Liabilities. (a) The Company's Reserve, Cozzi and
Kankakee subsidiaries have received notices from the United States
Environmental Protection Agency (the "EPA") that Reserve, Cozzi and Kankakee
and numerous other parties are considered potentially responsible parties (a
"PRP") and may be obligated under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("Superfund" or "CERCLA") to pay a
portion of the cost of remedial investigation, feasibility studies and
ultimately remediation to correct alleged releases of hazardous substances at
the Standard Scrap Metal/Chicago International Exporting Removal Action Site.
Superfund may impose joint and several liability for the costs of remedial
investigations and actions on the

<PAGE> 16
entities that arranged for disposal of certain wastes, the waste transporters
that selected the disposal sites, and the owners and operators of such sites.
Responsible parties (or any one of them) may be required to bear all of such
costs regardless of fault, legality of the original disposal, or ownership of
the disposal site. Based upon their analysis of the situation, the managements
of Reserve, Cozzi and Kankakee currently do not expect their aggregate
potential liability to be in excess of $175,000. There can be no assurance,
however, that their aggregate potential liability may not be greater than
$175,000.

(b) Cozzi has received a notice from the EPA that Cozzi is a PRP under
Superfund in regard to the site referred to as H&H Recycling in Gary, Indiana.
Cozzi is not currently in a position to determine its potential liability in
regard to this site. There can be no assurance that such potential liability
will not be material.

(c) Cozzi was served in a private cost recovery action alleging that
Cozzi is a PRP under Superfund in regard to the site referred to as Gould
Battery Site in Pennsylvania. Based upon its analysis of the situation,
including transaction documentation and indemnifications, Cozzi currently
expects that its ultimate liability in regard to this matter will be de
minimus, but there can be no assurance this will be the case.

Underground Storage Tanks. Underground storage tanks (UST's) exist at
several of the Company's sites. UST's are subject to various federal, state and
local laws on their operation. In the event a release of regulated product has
occurred, the Company may incur significant costs to investigate and remediate
the release. Environmental consultants to the Company have reported that an
above-ground storage tank at the Company's HouTex subsidiary is required to be
registered but is not yet registered.

Employee Health and Safety Issues. The Company's operations are also
subject to regulation by federal, state and local agencies responsible for
employee health and safety, including the Occupational Safety and Health Act
(the "OSHA"). A total of four accidental deaths of, and two serious accidental
injuries to, employees have occurred at the Company's Cozzi, HouTex and Reserve
subsidiaries during the past three years. Cozzi and Reserve have been fined by
OSHA in regard to such incidents. HouTex has also been cited and fined by OSHA
for alleged failure to establish energy control procedures and employee
training in regard to mobile shearing equipment. No assurance can be given that
potential liabilities of the Company in regard to such death and injuries, or
in regard to any future deaths of or injuries to the Company's employees will
not be material.

Recommendations of Environmental Consultants. Environmental consultants
to the Company have recommended that a variety of remedial actions be
undertaken, including: the sampling of soil, surface and ground water at its
various facilities; the remediation of any existing contamination under
applicable regulations; the development of Spill Prevention Control and
Countermeasure Plans ("SPCC"); the completion of certain actions in regard to
Storm Water Pollution Prevention Plans; the timely completion and/or filing of
certain annual reports and summaries required by governmental agencies; the
completion of Oil Discharge and Response Plans; and the remediation of certain
materials suspected of containing asbestos. If the Company fails to follow these
recommendations for an indefinite period of time, one or more of the sites
might, potentially, be subject to a governmental enforcement action, the
imposition of fines,

15
<PAGE> 17

penalties and damages, and/or require remediation at some future time at a cost
which may have an adverse effect on the Company's results of operations and
financial condition.

Compliance History. The Company has, in the past, been found not to be
in compliance with certain environmental laws and regulations, and has incurred
fines associated with such violations which have not been material in amount
and may in the future incur additional fines associated with such violations.
The Company has also paid a portion of the costs of certain remediation actions
at certain sites. No assurance can be given that material fines, penalties,
damages and expenses resulting from additional compliance issues and liabilities
will not be imposed on the Company in the future.

Lack of Management Depth and Experience. Due to the limited experience
of the Company's senior management in the scrap metal recycling business, the
Company relies substantially on the experience of the management team at each
subsidiary on day-to-day operating matters. There can be no assurance that these
individuals will continue to serve the subsidiaries. The loss of a significant
number of managers could have a material adverse effect on the Company's ability
to successfully implement its consolidation strategy.

Ability of Certain Individuals to Impact Ownership and Governance of
the Company. Pursuant to a stockholder's agreement (the "Stockholders
Agreement"), between Albert A. Cozzi, Frank J. Cozzi, Gregory P. Cozzi
(collectively, the "Cozzi Shareholders"), Samstock, L.L.C. ("Samstock"), T.
Benjamin Jennings, Gerard M. Jacobs, and the Company, the Company's Board of
Directors is comprised of five directors nominated by the Cozzi Shareholders
and five directors nominated by Messrs. Jacobs and Jennings, and one director
nominated by Samstock. Further, the Cozzi Shareholders, Samstock and Messrs.
Jacobs and Jennings own approximately 47% of the Company's issued and
outstanding shares of Common Stock. The Cozzi Shareholders, Samstock and
Messrs. Jacobs and Jennings have significant influence on the outcome of all
matters (including the election of directors and future mergers, acquisitions
or sale of assets) and may be deemed to have effective control over the
affairs and management of the Company. This influence may not be consistent
with the interests of the Stockholders. Further, the changes made in the
Company's governance structure to effect the merger with Cozzi and the private
equity placement to Samstock are examples of the Company's willingness to
rapidly change the management and governance of the Company if necessary or
desirable. There can be no assurance that recent changes in management and
governance or those that may occur in connection with subsequent acquisitions
or mergers will be favorable and in the best interests of the Stockholders.

The parties to the Stockholders Agreement also have agreed to vote for
proposals, if and when presented by the Company, to amend the Company's
organizational documents to require the approval of at least two-thirds of the
Board of Directors to, among other things: (i) amend the Company's certificate
of incorporation or bylaws; (ii) liquidate or merge the Company; (iii) sell
substantially all of the Company's assets; (iv) elect or remove officers; (v)
adopt an annual budget; (vi) borrow funds, sell assets or make capital
expenditures exceeding $5 million; (vii) issue or register the Company's
securities; or (viii) declare or pay any dividends or distributions. If the
Company's organizational documents are amended to reflect these restrictions,
and the Directors cannot agree on the Company's strategic direction, a minority
of four dissenting Directors could prevent the Company from taking any of the
actions listed above.

<PAGE> 18
Should the Board be unable to act because a minority of dissenting Directors
prevents the Board from taking a significant action, this could have a material
adverse effect on the Company's results of operations and financial condition.

Cyclicality of Operating Results/Operating Losses. The operating
results of the scrap metal recycling processing industry in general, and the
Company's operations specifically, are highly cyclical in nature as they tend to
reflect and be amplified by general economic conditions. In periods of national
recession or periods of minimal economic growth, the operations of scrap metal
recycling processing companies have been materially adversely affected. For
example, during recessions or periods of minimal economic growth, the automobile
and construction industries typically experience major cutbacks in production,
resulting in decreased demand for steel, copper and aluminum and significant
fluctuations in demand and pricing for the Company's products. Future economic
downturns in the national economy would materially and adversely affect the
Company's results of operations and financial condition. The ability of the
Company to withstand significant economic downturns in the future will depend in
part on the level of the Company's capital and liquidity.

The Company's EMCO subsidiary has incurred operating losses and
required capital infusions since its merger with the Company in April 1996.
There can be no assurance that the Company will not be required to provide
additional funding to EMCO. Further, there can be no assurance that existing or
future subsidiaries will not require similar infusions, or that the Company will
be able to provide such fundings if needed. The need to provide this funding or
the inability to do so could have a material adverse effect on the Company's
results of operations and financial condition.

Failure to Acquire Joint Venture Interests. The Company is a member of,
with a 50% interest in, two limited liability companies, one with operations in
Phoenix, Arizona (Salt River) and the other in Memphis, Tennessee (PerlCo). The
Company has binding signed letters of intent to acquire the remaining 50%
interest in each of these joint ventures. However, there can be no assurance
that the Company will acquire these remaining interests. If the Company is
unable to acquire either of these joint venture interests, then the Company may
be unable to realize some of the operational efficiencies anticipated in
connection with the merger with Cozzi and may be prohibited by the agreements
governing the joint ventures from taking actions with respect to the joint
ventures' assets or liabilities that may be in the Company's best interest.

Dependence on Scrap Suppliers. The profitability of the Company's scrap
recycling operations depends, in part, on the availability of an adequate source
of supply. The Company acquires its scrap inventory from numerous sources. These
suppliers typically are not bound by long-term contracts and have no obligation
to continue sending scrap materials to the Company. Decisions by a substantial
number of scrap suppliers to cease sending scrap materials to the Company would
have a material adverse effect on the Company's results of operations and
financial condition.

<PAGE> 19

Concentration of Customers and Credit Risk. On a proforma basis giving
effect to the Completed Acquisitions, the Company's five largest customers
represented approximately 31% of revenues for the twelve months ended March 31,
1997 and the six months ended September 30, 1997, respectively. Accounts
receivable balances from these customers represented approximately 30% of
accounts receivable at September 30, 1997. The Company's largest customer, David
J. Joseph and Company accounted for approximately 12% and 13% of revenues for
the twelve months ended March 31, 1997 and six months ended September 30, 1997,
respectively, and accounted for approximately 17% of accounts receivable at
September 30, 1997. The loss of any one of the Company's significant customers
could adversely affect the Company's results of operations and financial
condition.

In connection with the sale of the Company's products, the Company
generally does not require collateral as security for customer receivables.
Certain of the Company's subsidiaries have significant balances owing from
customers that operate in cyclical industries and under leveraged conditions
that may impair the collectibility of these receivables. Failure to collect
amounts due on these receivables could have a material adverse effect on the
Company's results of operations and financial condition.

Potential Substantial Dilution to Existing Stockholders; Registration
Rights. The Company's Amended Certificate of Incorporation authorizes the
issuance of: (i) 80,000,000 shares of common stock, of which 29,685,653 are
issued and outstanding as of the date hereof; (ii) 4,000,000 of preferred stock,
of which 59,000 have been designated as either Series A or Series B Preferred
Stock and 45,000 of which are issued and outstanding as of the date hereof. The
Company's board of directors has the authority to issue additional shares of
common or preferred shares, or securities convertible or exercisable into such
shares such as options or warrants, as the case may be for a variety of purposes
including as consideration for additional acquisitions. These additional shares
may be issued, or be subject to exercise, at prices below prevailing market
prices of the Common Stock or at prices below the Company's book value. Common
Stock sold at such a discount would result in dilution to the then-existing
Stockholders of the Company as well as reduce each Stockholders' percentage
interest in the Company. Further, the Company may issue additional shares of
preferred stock on terms and conditions which may discourage, impede or prevent
a merger, tender offer or proxy contest even though such an event may be
favorable to the interest of stockholders as a whole. The effectiveness of
this Form S-3 Registration Statement, and of any subsequent registration
statements relating to the Company's common stock, will increase substantially
the number of shares available for sale in the public market and may have an
adverse impact on the market price of the Common Stock.

Volatility of Trading Price. The trading price of the Common Stock has
been, and in the future is expected to be, volatile and subject to market
fluctuation as a result of a number of factors, including, but not limited to,
merger and acquisition announcements and developments, current and anticipated
results of operations, execution of private or public equity or debt placements,
filing and effectiveness of registration statements relating to the Company's
common stock, future product offerings by the Company or its competitors and
factors unrelated to the operating performance of the Company. The trading
price of the Company's Common Stock may also vary as a result of changes in the
business, operations, prospects or financial results of the Company, general
market and economic conditions, additional future proposed acquisitions by the
Company and other factors. Failure in any fiscal quarter to meet the investment
community's revenues or earnings expectations, if any, could have an adverse
impact on the trading price of the Common Stock, as could sales of large

<PAGE> 20

amounts of Common Stock by existing Stockholders. In addition, sales of
substantial amounts of the Company's Common Stock in the public market could
adversely affect the market price of the Company's Common Stock. In the event
the market price of Common Stock were adversely affected by such sales, the
Company's access to equity capital markets could be adversely affected and
issuances of Common Stock in connection with acquisitions, or otherwise, could
dilute future earnings per share. Management believes that the Company's Stock
price reflects an assumption that the Potential Acquisitions will be completed.
Completion of each Potential Acquisition is, however, subject to a number of
conditions. There can be no assurance that these conditions will be satisfied.
If the Potential Acquisitions are not completed, the trading price of the Common
Stock could be adversely affected.

Potential Restrictions on Mergers and Other Actions. Section 203 of the
Delaware General Corporation Law (the "Delaware Business Combination Statute")
prohibits, under certain circumstances, "business combinations" between a
Delaware corporation whose stock is publicly-traded and an "interested
stockholder" of such corporation. The provisions prohibiting "business
combinations" could delay or frustrate the removal of incumbent directors or a
change in control of the Company. The provisions could also discourage, impede,
or prevent a merger, tender offer or proxy contest, even if such an event would
be favorable to the interest of stockholders. In addition, the Company's
certificate of incorporation authorizes the issuance of 4,000,000 shares of
undesignated preferred Stock (the "Preferred Stock"), which the Board of
Directors may cause the Company to issue in one or more series. The Board of
Directors has designated 36,000 and 23,000 shares, respectively, of the
Preferred Stock for issuance as Series A Convertible Preferred Stock ("Series A
Preferred Stock") and Series B Convertible Preferred Stock ("Series B Preferred
Stock"). The Board of Directors has the authority to fix the number of shares of
Preferred Stock and determine or alter for each series, the voting powers,
designations, preferences and rights of such shares. If the Company should ever
issue Preferred Stock in addition to the Convertible Preferred Stock, such
Preferred Stock could contain voting or other rights which could discourage,
impede, or prevent a merger, tender offer or proxy contest which could be
favorable to the interests of the stockholders.

So long as shares of Series A or Series B Preferred Stock are
outstanding, the Company is required to obtain the prior approval of the holders
of at least a majority of all shares of the applicable Series of Preferred Stock
outstanding at the time before: (i) increasing the authorized number of shares
of such Series of Preferred Stock; (ii) altering or changing the rights,
preferences or privileges of such Series of Preferred Stock or any other capital
Stock of the Company so as to adversely affect such Series of Preferred Stock;
or (iii) creating any new class or series of capital Stock having a preference
over such Series of Preferred Stock as to distribution of assets upon
liquidation, dissolution or winding up of the Company. This restriction could
prevent the Company from taking actions which could be favorable to the
interests of the stockholders.

<PAGE> 21

USE OF PROCEEDS

This Prospectus relates to Shares being offered and sold for the
accounts of the Selling Stockholders. The Company will not receive any proceeds
from the sale of the Shares but will receive proceeds of $11,342,249 if all the
warrants referred to herein are exercised although in many instances the
documents governing the warrants permit the holder thereof to exercise the
warrants in a "cashless" manner. A "cashless" exercise will reduce the number of
shares ultimately issued but will also reduce the proceeds payable to the
Company from such issuance. There can be no assurance that any of the warrants
will be exercised or that the Company will receive any proceeds on exercise
thereof. The Company has agreed to pay all expenses related to the registration
of the Shares. See "Plan of Distribution."

SELLING STOCKHOLDERS

The following table sets forth the name of each Selling Stockholder,
the aggregate number of shares of Common Stock beneficially owned by each
Selling Stockholder as of December 29, 1997 (including Shares that are issuable
on exercise of options or warrants, the conversion of the Series A and Series B
Preferred Stock or conversion of a note payable), and the aggregate number of
shares of Common Stock registered hereby that each Selling Stockholder may offer
and sell pursuant to this Prospectus. Because the Selling Stockholders may offer
all of a portion of the Shares at any time and from time to time after the date
hereof, no estimate can be made of the number of Shares that each Selling
Stockholder may retain upon completion of the Offering. However, assuming all of
the Shares offered hereunder are sold by the Selling Stockholders, then unless
otherwise noted, after completion of the Offering, none of the Selling
Stockholders will own more than one percent of the shares of Common Stock
outstanding. Of the 15,352,779 shares offered hereby, 8,742,777 shares are
issued and outstanding as of the date of this Prospectus, and an aggregate of
6,610,002 shares have been reserved for issuance by the Company to certain of
the Selling Stockholders upon the conversion of the Series A and Series B
Preferred Stock and the exercise of warrants. The number of shares of Common
Stock into which the Series A and Series B Preferred Stock is convertible is
not determinable until conversion. Under the registration rights agreements
entered into between the Company and the holders of the Series A and Series B
Preferred Stock, the Company is required to register at least 175% of the
number of shares of common stock that would be issuable if each of the Series A
and Series B Preferred Stock was converted at a price equal to the "Closing Bid
Price" over the five (5) trading days immediately preceding but not including
the purchase date times 85%. Therefore, for purposes of calculating the number
of Shares beneficially owned and offered hereby by the holders of the Series A
and Series B Preferred Stock, the number of Shares issuable upon conversion of
the Series A or Series B Preferred Stock has been calculated in accordance with
the registration rights agreement. Based on information provided to the Company
by the Selling Stockholders, no Selling Stockholder owns 1% or more except as
indicated below. Beneficial ownership after the Offering will depend on the
number of Shares sold by each Selling Stockholder. The table set forth below
does not include such additional number of Shares which may be issuable upon
conversion of the Series A or Series B Preferred Stock or exercise of warrants
to prevent dilution resulting from stock splits, stock

<PAGE> 22

dividends or similar events, or by reason of changes in the conversion price in
accordance with the terms of the certificate of designation governing the Series
A or Series B Preferred Stock, all of which Shares, to the extent permitted
under Rule 416 of the Securities Act, are offered being offered by this
Prospectus.

<TABLE>
<CAPTION>
SHARES SHARES TO BE
BENEFICIALLY PERCENTAGE OFFERED FOR THE
OWNED PRIOR TO OWNED SELLING
SELLING THE PRIOR TO STOCKHOLDER'S
STOCKHOLDERS OFFERING OFFERING(1) ACCOUNT
------------ -------------- ----------- ---------------
<S> <C> <C> <C>
Advantage Fund Limited 1,849,319(2) 5.86% 1,849,319
Isiah Anderson, Jr. 500(3) * 500
Neal Bidwill 27,600 * 27,600
Charles Booker 1,000(4) * 1,000
Capital Ventures 969,999(5) 3.16% 969,999
International
Juan Castillo 250(6) * 250
Charles A. Isaac 303,296 1.02% 303,296
Revocable Trust
Erhard Chorle 70,000(7) * 70,000
Clend Investment 835,260(8) 2.48% 735,260
Holdings LTD
Copperstate Metals, Inc. 305,587(9) 1.03% 293,226
Carol Cox 8,334(10) * 8,334
Irene Cozzi 95,238 * 95,238
James R. Debord 69,000 * 69,000
Gail G. Ellis 92,000 * 92,000
Sam Ellis 500(11) * 500
Empire Metals 2,573,050(12) 8.67% 1,928,836
Mary B. Galvin 91,863 * 91,863
</TABLE>

<PAGE> 23

<S> <C> <C> <C>
Guadalupe Garcia 500 (13) * 500
Jose Garcia 250 (14) * 250
Jose L. Garcia 750 (15) * 750
Roger Greene 19,234 (16) * 19,234
Robert Hale 12,500 (17) * 12,500
Deerwood Harrell, Jr 500 (18) * 500
Thomas H. Harrell 3,088 (19) * 3,000
David G. Hauldren 15,000 * 15,000
Charles Hays 100,000 * 100,000
Joel Douglas Helton 103,750 (20) * 103,750
Johnnie Henderson 1,000 (21) * 1,000
Joe Hernandez 500 (22) * 500
David Hochberg 16,078 (23) * 12,500
Linda Hochberg 25,221 (24) * 25,000
George A. Isaac III 1,080,279 (25) 3.63% 76,923
Second Revocable Trust
J&B Associates 47,548 (26) * 47,548
Mario Jaimez 750 (27) * 750
Jeffrey Johnson 250 (28) * 250
Paul D. Joseph 840,000 (29) 2.75% 840,000
</TABLE>

<PAGE> 24

<S> <C> <C> <C>
Scott Joseph 280,000 (30) * 280,000
Steven C. Joseph 280,000 (31) * 280,000
James Kedzieski 1,000 (32) * 1,000
Nathan King 3,000 (33) * 3,000
James Levy 13,800 * 13,800
Lynn A. Isaac Second 340,856 1.15% 340,856
Revocable Trust
Leonel Macedo 250 (34) * 250
Ian MacLeod 1,085,000 (35) 3.63% 175,000
MacLeod Family Trust 885,000 (36) 2.98% 885,000
Byron McBride 500 (37) * 500
Dawn Meiners 92,000 * 92,000
Mike Melnik 146,289 * 146,289
Zalman Melnik 105,933 * 105,933
Kenneth A. Merlau 148,231 * 137,931
Frank Miller, Jr 500 (38) * 500
Donald F. Moorehead, Jr 913,643 (39) 3.07% 337,880
George O. Moorehead 870,996 (40) 2.93% 316,859
Anthony C. Newton 250 (41) * 250
William D. Niemeyer 73,972 * 68,972
Daniel G. Pappano 60,000 (42) * 50,000
</TABLE>

<PAGE> 25

<S> <C> <C> <C>
Frank M. Paris 13,800 * 13,800
Peer Pederson 47,113 (43) * 47,113
Noe Pena 500 (44) * 500
Jeffrey Plonski 25,300 (45) * 25,000
Cristopher Proler 8,333 (46) * 8,333
Proprietary Convertible 1,547,911 (47) 4.96% 1,547,911
Investment Group, Inc.
Jeffrey J. Puglisi 20,000 * 20,000
Richard G. Isaac 454,553 1.53% 454,553
Revocable Trust
Robert Rivas 500 (48) * 500
Willie Roberts 250 (49) * 250
Lolita A. Romano 76,865 * 74,865
Ronald I. Romano 76,865 * 74,865
Ronald T. Romano 2,635 * 2,635
Ryan E. Romano 2,635 * 2,635
Harold Rubenstein 2,758,883 (50) 9.29% 70,000
Rafael Ruiz 750 (51) * 750
Dennis Rusher 3,000 (52) * 3,000
Saba Salloum 25,000 (53) * 25,000
David Schechter 27,800 * 13,800
Leslie Smith 8,333 (54) * 8,333
Robert F. Smith 1,328,329 (55) 4.47% 1,048,329
</TABLE>

<PAGE> 26

<S> <C> <C> <C>
Timothy Smith 25,000 (56) * 25,000
Billy Sonnier 750 (57) * 750
David Wayne Sonnier 105,750 (58) * 103,750
Angel Sosa 500 (59) * 500
Hal Tolin 30,000 (60) * 25,000
Catherine H. Upton 500 (61) * 500
Stefanie Vaught 25,000 (62) * 25,000
Terry White 500 (63) * 500
Katrina Whitman 2,250 (64) * 2,250
Thomas Oscar Whitman 106,576 (65) * 103,750
William M. Isaac 303,296 1.02% 303,296
Revocable Trust
Albert Williams 250 (66) * 250
Management Trust
David M. Zack 301,862 (67) 1.02% 95,955
Gerald Zack 301,862 (68) 1.02% 95,955
Raymond F. Zack 385,196 (69) 1.30% 95,955
---------- ----------
TOTAL 22,879,861 15,352,779
</TABLE>

*less than 1%

<PAGE> 27

- ----------------------------
1. Share amounts and percentages shown for each person or entity are adjusted
to give effect to shares of the Company's common stock that are not
outstanding but may be acquired by a person or entity upon exercise of
all options and warrants exercisable by such person or entity or conversion
of Series A or Series B Preferred Stock owned by such person or entity.
These shares of common stock are not, however, deemed to be outstanding
for the purpose of computing the percentage of outstanding shares
beneficially owned by any other person or entity.

2. Consists of 1,849,319 Shares issuable upon conversion of the Series A
Preferred Stock.

3. Consists of Warrants to purchase 500 Shares.

4. Consists of Warrants to purchase 1,000 Shares.

5. Consists of 969,999 Shares issuable upon conversion of the Series B
Preferred Stock. The Series B Preferred Stock provides that no holder may
convert such preferred stock to the extent that the shares to be received
by such holder upon such conversion would cause such holder to own more
than 4.9% of the outstanding shares of Common Stock. Therefore the number
of shares reported herein may exceed the number of shares Capital Venture
International is deemed to beneficially own under Section 13(d) of the
Securities Exchange Act of 1934, as amended.

6. Consists of Warrants to purchase 250 Shares.

7. Consists of Warrants to purchase 70,000 Shares; Mr. Chorle is a shareholder
of the law firm which has provided and continues to provide legal services
to the Company.

8. Consists of Warrants to purchase 100,000 Shares, 372,779 Shares issued to
Clend Investment Holdings Ltd. in connection with the Company's acquisition
of HouTex, 182,481 Shares issued on the conversion of a note payable, and
180,000 Shares issued upon the exercise of Warrants.

9. Consists of 305,587 unregistered Shares issued in connection with the
Company's acquisition of EMCO.

10. Consists of Warrants to purchase 8,334 Shares.

11. Consists of Warrants to purchase 500 Shares.

12. Consists of Warrants to purchase 562,900 Shares and 2,010,150 Shares issued
to Empire Metals in connection with the Company's acquisition of EMCO.

13. Consists of Warrants to purchase 500 Shares.

14. Consists of Warrants to purchase 250 Shares.

15. Consists of Warrants to purchase 750 Shares.

16. Consists of Warrants to purchase 10,000 Shares and 9,234 Shares purchased
by Mr. Greene.

17. Consists of Warrants to purchase 12,500 Shares.

18. Consists of Warrants to purchase 500 Shares.

19. Consists of Warrants to purchase 3,000 Shares and 88 Shares purchased by
Mr. Harrell.

20. Consists of Warrants to purchase 16,250 Shares and 87,500 Shares issued to
Mr. Helton in connection with the

<PAGE> 28
Company's acquisition of Proler.

21. Consists of Warrants to purchase 1,000 Shares.

22. Consists of Warrants to purchase 500 Shares.

23. Consists of Warrants to purchase 12,500 Shares and 3,578 Shares purchased
by Mr. Hochberg.

24. Consists of Warrants to purchase 25,000 Shares and 221 Shares purchased by
Mrs. Hochberg.

25. George A. Isaac III is a Director and Executive Vice President of the
Company; consists of Warrants to purchase 539,423 Shares and 540,856
Shares issued to the George A. Isaac III Second Revocable Trust in
connection with the Company's acquisition of Isaac.

26. Consists of 47,548 Shares issuable upon conversion of the Series A
Preferred Stock.

27. Consists of Warrants to purchase 750 Shares.

28. Consists of Warrants to purchase 250 Shares.

29. Consists of Warrants to purchase 840,000 Shares.

30. Consists of Warrants to purchase 280,000 Shares.

31. Consists of Warrants to purchase 280,000 Shares.

32. Consists of Warrants to purchase 1,000 Shares.

33. Consists of Warrants to purchase 3,000 Shares.

34. Consists of Warrants to purchase 250 Shares.

35. Consists of Warrants to purchase 175,000 Shares, 25,000 Shares purchased by
Mr. & Mrs. MacLeod and 885,000 Shares beneficially owned by the MacLeod
Family Trust.

36. Consists of 725,000 Shares issued in connection with the Company's
acquisition of MacLeod and 160,000 Shares issued on the conversion of a
note payable.

37. Consists of Warrants to purchase 500 Shares.

38. Consists of Warrants to purchase 500 Shares.

39. Director and Vice Chairman of the Board of the Company, consists of
Warrants to purchase 251,933 Shares, 44,110 Shares issuable upon conversion
of the Series A Preferred Stock, 300,000 Shares purchased by Mr. Moorehead,
25,000 Shares issued to Mr. Moorehead in a private offering, 280,100 Shares
issued to Mr. Moorehead in connection

<PAGE> 29

with the Company's acquisition of EMCO, and options to purchase 12,500
Shares.

40. Consists of Warrants to purchase 351,833 Shares, 40,000 Shares purchased by
Mr. Moorehead, 25,000 Shares issued to Mr. Moorehead in a private
offering, 304,163 Shares issued to Mr. Moorehead in connection with the
Company's Acquisition of EMCO and options to purchase 150,000 Shares.

41. Consists of Warrants to purchase 250 Shares.

42. Consists of Warrants to Purchase 50,000 Shares; and 10,000 Shares purchased
by Mr. Pappano; Mr. Pappano is a shareholder of the law firm which has
provided and continues to provide legal services to the Company.

43. Consists of 47,113 Shares issuable upon conversion of the Series A Preferred
Stock.

44. Consists of Warrants to purchase 500 Shares.

45. Consists of Warrants to purchase 25,000 Shares and 300 Shares purchased by
Mr. Plonski.

46. Consists of Warrants to purchase 8,333 Shares.

47. Consists of 577,912 Shares issuable upon conversion of the Series A
Preferred Stock and 969,999 Shares issuable upon conversion of the
Series B Preferred Stock. The Series B Preferred Stock provides that no
holder may convert such preferred stock to the extent that the shares to
be received by such holder upon such conversion would cause such holder
to own more than 4.9% of the outstanding shares of Common Stock. Therefore
the number of shares reported herein may exceed the number of shares
Proprietary Convertible Investment Group, Inc. is deemed to beneficially
own under Section 13(d) of the Securities Exchange Act of 1934, as amended.

48. Consists of Warrants to purchase 500 Shares.

49. Consists of Warrants to purchase 250 Shares.

50. Director of the Company; consists of Warrants to purchase 83,333 Shares,
32,500 Shares purchased by Mr. Rubenstein, 70,000 Shares issued to
Mr. Rubenstein in a private offering and 2,573,050 Shares beneficially owned
by Empire Metals.

51. Consists of Warrants to purchase 750 Shares.

52. Consists of Warrants to purchase 3,000 Shares.

53. Consists of Warrants to purchase 25,000 Shares.

54. Consists of Warrants to purchase 8,333 Shares.

55. Consists of 48,329 Shares issuable upon conversion of the Series A Stock,
1,000,000 Shares issued to Mr. Smith in a private offering and 280,000
Shares purchased by Mr. Smith.

56. Consists of Warrants to purchase 25,000 Shares.

57. Consists of Warrants to purchase 750 Shares.

58. Consists of Warrants to purchase 16,250 Shares, 2,000 Shares purchased by
Mr. Sonnier and 87,500 Shares issued to Mr. Sonnier in connection with
the Company's acquisition of Proler.

59. Consists of Warrants to purchase 500 Shares.

<PAGE> 30
60. Consists of Warrants to purchase 25,000 Shares and 5,000 Shares purchased
by Mr. Tolin.

61. Consists of Warrants to purchase 500 Shares.

62. Consists of Warrants to purchase 25,000 Shares.

63. Consists of Warrants to purchase 500 Shares.

64. Consists of Warrants to purchase 2,250 Shares.

65. Consists of Warrants to purchase 16,250 Shares, 2,826 Shares purchased by
Mr. Whitman and 87,500 Shares issued to Mr. Whitman in connection with the
Company's acquisition of Proler.

66. Consists of Warrants to purchase 250 Shares.

67. Consists of Warrants to purchase 100,000 Shares, 100,000 Shares issued to
Mr. Zack in connection with the Company's acquisition of EMCO and 101,862
Shares owned by Copperstate Metals, Inc.

68. Consists of Warrants to purchase 100,000 Shares, 100,000 Shares issued to
Mr. Zack in connection with the Company's acquisition of EMCO and 101,862
Shares owned by Copperstate Metals, Inc.

69. Consists of Warrants to purchase 183,333 Shares, 100,000 Shares issued to
Mr. Zack in connection with the Company's acquisition of EMCO and 101,863
Shares owned by Copperstate Metals, Inc.

There are no material relationships between any of the Selling
Stockholders and the Company or any of its predecessors or affiliates, nor have
any such material relationships existed within the past three years, except as
follows:

On April 11, 1996, the Company and Harold Rubenstein, a Director of the
Company, entered into a five-year consulting agreement. Under this Agreement,
Mr. Rubenstein provides the Company with consulting and management assistance
with respect to operations, strategic planning and other aspects of the
Company's business. Fees paid for these services amounted to $84,000 for the
year ended March 31, 1997.

The Company has issued a promissory note due April 11, 1999 bearing
interest at 9% per year with a balance outstanding as of March 31, 1997 of
$547,000, to H&S Broadway, an entity principally owned by Harold Rubenstein. The
Company has also issued a promissory note due April 11, 1999 with a balance as
of March 31, 1997 of $403,000 to Harold Rubenstein. During the fiscal year ended
March 31, 1997, the Company paid $78,000 of interest to H&S Broadway and Harold
Rubenstein. Mr. Rubenstein also is a 9.91% shareholder of Waste Manufacturing
and Leasing, a company that leases equipment to EMCO and from which EMCO
purchases manufactured containers.

<PAGE> 31

The Company has entered into various transactions with Ellis Metals,
Inc. ("Ellis Metals") and Empire Metals ("Empire"), which are principally owned
by Harold Rubenstein. On April 11, 1996, the Company entered into a five year
exclusive supply agreement with Ellis Metals, which requires Ellis Metals to
sell all of its inventory to EMCO or to EMCO's customers through a direct
shipment arrangement. In the latter arrangement, EMCO receives a brokerage fee.
In consideration for entering into this agreement, Ellis Metals receives a fee
of $2,500 per month. During the 1997 fiscal year, the Company paid Ellis Metals
$30,000 under the terms of this agreement. The Company also has advanced
$300,000 to Ellis Metals under an unsecured note which bears interest at the
rate of 9% per annum and matures on April 11, 2006. The Company purchases
inventory from Empire, from time to time, at prices equivalent to
market value. During the 1997 fiscal year, the Company purchased $3.9 million
and $.3 million of inventory from Ellis Metals and Empire, respectively, and
also had sales of $.3 million to Ellis Metals. As of March 31, 1997, the
Company had accounts payable of $93,000 and $84,000 to Ellis Metals and Empire,
respectively.

The Company also leases certain land to Ellis Metals. During the 1997
fiscal year, the Company received $78,000 in rent payments from Ellis Metals.
The Company has a five year option, beginning June 1, 1999, to purchase certain
assets of Ellis Metals for $1.364 million, subject to certain adjustments.

To facilitate a loan to the Company from a commercial bank, on January
7, 1997, Gerard M. Jacobs, T. Benjamin Jennings, Donald F. Moorehead, Jr.,
George O. Moorehead, Harold Rubenstein and Raymond F. Zack, each of whom is or
was a Director at the time of issuance, provided personal guarantees to the
bank. In consideration of the guarantees, the Company issued warrants to these
individuals (the "Guaranty Warrants") to purchase an aggregate of 500,000 shares
of Common Stock at $4.00 per share (subject to certain restrictions). The
Guaranty Warrants expire on or about January 7, 2002.

The Company and George O. Moorehead, formerly a Director and Executive
Vice President of the Company, have entered into two agreements, a Separation
Agreement and a Stock Warrant Settlement Agreement, resolving all outstanding
issues between the Company and Mr. Moorehead. Pursuant to the Separation
Agreement, Mr. Moorehead resigned from his employment with the Company, and
EMCO and resigned as a director of EMCO and delivered a Non-Compete,
Non-Solicitation and Confidentiality Covenant and Agreement in return for which
the Company: (a) paid Mr. Moorehead $250,000; (b) agreed to provide Mr.
Moorehead certain insurance and other benefits during a five-year period
beginning on December 1, 1997; (c) agreed to pay certain legal fees to Mr.
Moorehead's counsel; and (d) agreed to permit Mr. Moorehead to exercise any
options or warrants to acquire Common Stock previously granted to him, on a
"net cashless" basis, subject to the Company's right to refuse "net cashless"
exercises under certain circumstances. Pursuant to the Stock Warrant Settlement
Agreement, the Company issued to Mr. Moorehead warrants to purchase 200,000
shares of Common Stock at $12.00 per share, exercisable for a period of five
years, and agreed to pay Mr. Moorehead amounts totalling $665,000. Mr.
Moorehead would be permitted to exercise the warrants issued under this
Agreement on a "net cashless" basis subject to the Company's right to refuse
"net cashless" exercises under certain circumstances.

MacLeod leases certain land from Ian MacLeod, a Selling Stockholder
under a five-year lease (subject to three five-year extensions) providing for an
annual base rent of $48,000. The Company owns the real property on which
MacLeod's principal activities are performed.

<PAGE> 32

Isaac leases certain property from a company in which George A. Isaac
III, a Director of the Company, is a shareholder. The property is subject to a
lease which commenced with the acquisition of Isaac as of June 23, 1997. The
annual base rent for the property is approximately $317,000.

HouTex leases a 45 acre processing facility located in Houston, Texas
from a limited partnership affiliated with Mike Melnik, a Selling Stockholder
for an annual rent of $228,000.

Kenneth Merlau, a Selling Stockholder received from Isaac consulting
fees of approximately $230,000 in connection with the acquisition of Isaac.

George A. Isaac III, William M. Isaac, Lynn A. Isaac, Richard G. Isaac,
and Charles A. Isaac were the primary shareholders of the Isaac Group which was
acquired by the Company on June 23, 1997, and received an aggregate of 1,942,857
Shares and warrants to purchase 826,923 Shares in connection with the
acquisition. Harold Rubenstein, George O. Moorehead and Donald F. Moorehead, Jr.
were the ultimate primary shareholders of EMCO Recycling Corp. which was
acquired by the Company on April 11, 1996, and received an aggregate of
2,594,513 Shares and warrants to purchase 700,000 Shares in connection with the
acquisition. Ian MacLeod was the primary shareholder of the MacLeod Group of
Companies which was acquired by the Company on January 1, 1997, and received
885,000 Shares and warrants to purchase 175,000 Shares in connection with the
acquisition. Paul D. Joseph, Scott Joseph and Steven C. Joseph were the primary
shareholders of Reserve Iron & Metal, L.P. which was acquired by the Company on
May 1, 1997, and received warrants to purchase an aggregate of 1,400,000 shares
in connection with the acquisition. Mike Melnik and Zalman Melnik were
the primary shareholders of HouTex Metals Company, Inc. which was
acquired by the Company on January 7, 1997, and received an aggregate of
252,222 Shares in connection with the acquisition.

PLAN OF DISTRIBUTION

The Shares may be sold or distributed from time to time by the Selling
Stockholders, or by pledgees, donees or transferees of, or other successors in
interest to, the Selling Stockholders, directly to one or more purchasers
(including pledgees) or through brokers, dealers or underwriters who may act
solely as agents or may acquire Shares as principals, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices, or at fixed prices, which may be changed. The
distribution of the Shares may be effected by one or more of the following
methods: (i) ordinary brokers' transactions, which may include long or short
sales; (ii) transactions involving cross or block trades or otherwise on the
Nasdaq National Market; (iii) purchases by brokers, dealers or underwriters as
principals and resale by such purchasers for their own accounts pursuant to this
Prospectus; (iv) "at the market" to or through market makers or into an existing
market for the Common Stock; (v) in other ways not involving market makers or
established trading markets, including direct sales to purchasers or sales
effected through agents; (vi) through transactions in options, swaps or other
derivatives (whether exchange-listed or otherwise), or (vii) any combination of
the foregoing, or by any other legally available means. In addition, the Selling
Stockholders or their successors in interest may enter into hedging transactions
with broker-dealers who may engage in short sales of Common Stock in the course
of hedging the positions they assume with the Selling Stockholders. The Selling
Stockholders or their

<PAGE> 33

successors in interest may also enter into option or other transactions with
broker-dealers that require the delivery to such broker-dealers of the Shares,
which Shares may be resold thereafter pursuant to this Prospectus. Shares to be
sold hereunder may be issued upon conversion of the Series A or Series B
Preferred Stock in accordance with its terms, or in other transactions with the
Company involving the Series A or Series B Preferred Stock, including, without
limitation, issuance of Shares in exchange for shares of Series A or Series B
Preferred Stock and issuance of Shares pursuant to modification of the terms of
the Series A or Series B Preferred Stock, or in settlement of claims with
respect to rights of holders of Series A or Series B Preferred Stock.

Brokers, dealers, underwriters or agents participating in the
distribution of the Shares as agent may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders (and, if
they act as agent for the purchaser of such Shares, from such purchaser). Such
discounts, concessions or commissions as to a particular broker, dealer,
underwriter or agent might be greater or less than those customary in the type
of transaction involved.

The Selling Stockholders and any such brokers, dealers or other agents
that participate in such distribution may be deemed to be "underwriters" within
the meaning of the Securities Act, and any discounts, commissions or concessions
received by the Selling Stockholders and any such brokers, dealers or other
agents might be deemed to be underwriting discounts and commissions under the
Securities Act. Neither the Company nor the Selling Stockholders can presently
estimate the amount of any such compensation. The Company knows of no existing
arrangements between any Selling Stockholder and any other Selling Stockholder,
broker, dealer or other agent relating to the sale or distribution of the
Shares.

Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of any of the Shares may not simultaneously
engage in market activities with respect to the Common Stock for the applicable
period under Regulation M prior to the commencement of such distribution. In
addition and without limiting the foregoing, the Selling Stockholders will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including without limitation Rules 10b-5 and Regulation
M, which may limit the timing of purchases and sales of any of the Shares by the
Selling Stockholders. All of the foregoing may affect the marketability of the
Common Stock.

The Company will pay substantially all of the expenses incident to this
Offering of the Shares by the Selling Stockholders other than commissions,
concessions and discounts of brokers, dealers or other agents. Each Selling
Stockholder may indemnify any broker, dealer, or other agent that participates
in transactions involving sales of the Shares against certain liabilities,
including liabilities arising under the Securities Act. The Company has agreed
to indemnify certain Selling Stockholders and any such statutory "underwriter"
and controlling persons of such "underwriter" against certain liabilities,
including certain liabilities under the Securities Act.

In order to comply with certain states' securities laws, if applicable,
the Shares will be sold in such jurisdictions only through registered or
licensed brokers or dealers.

<PAGE> 34

DESCRIPTION OF CAPITAL STOCK

The Amended and Restated Certificate of Incorporation of the Company
(the "Certificate of Incorporation") authorizes capital stock consisting of
80,000,000 shares of Common Stock, par value $.01 per share, and 4,000,000
shares of preferred stock without designation, par value $0.01 per share
("Preferred Stock"). There were 29,685,653 shares of Common Stock issued and
outstanding as of December 29, 1997. Additionally, the Board of Directors has
designated 36,000 shares of Preferred Stock as "Series A Preferred Stock," face
amount of $1,000 per share, 25,000 shares of which are outstanding as of
December 29, 1997, and 23,000 shares of Preferred Stock as "Series B Preferred
Stock," face amount of $1,000 per share, 20,000 shares of which are outstanding
as of December 29, 1997. The following summary description of the capital stock
of the Company is qualified in its entirety by reference to the Certificate of
Incorporation and Bylaws of the Company.

Common Stock. Each share of Common Stock is entitled to one vote. There
are no preemptive, subscription, conversion or redemption rights pertaining to
the shares of Common Stock. Stockholders are entitled to receive dividends as
declared by the Board of Directors out of assets legally available therefor and
to share ratably in the assets of the Company available upon liquidation.

Preferred Stock. The Company's certificate of incorporation grants the
Board of Directors the right to cause the Company to issue, from time to time,
all or part of the preferred stock remaining undesignated in one or more series,
and to fix the number of shares of preferred stock remaining undesignated and
determine or alter for each series, the voting powers, full, limited, or none,
and other designations, preferences, or relative, participating, optional or
other special rights and such qualifications, limitations, or restrictions
thereof. On August 8, 1997, the Company designated 36,000 shares of preferred
stock as "Series A Convertible Preferred Stock," par value $.01 per share
(Stated Value of $1,000 per share). On November 20, 1997, the Company designated
23,000 shares of preferred Stock as "Series B Convertible Preferred Stock," par
value $.01 per share (Stated Value of $1,000 per share).

The Series A Preferred Stock has a "Liquidation Preference" equal to
$1,000 per share plus any accrued and unpaid dividends. Upon the liquidation,
dissolution or winding up of the Company, holders of the Series A Preferred
Stock are entitled to receive payment of the Liquidation Preference on a pro
rata basis based on the Liquidation Preference of the preferred stock held by
each holder before any payment is made to holders of Common Stock or any stock
of the Company junior to the Series A Preferred Stock.

Dividends on the Series A Preferred Stock accrue at an annual rate of
6% of the Stated Value and are payable in cash or, at the Company's option, and
upon satisfaction of certain conditions, in additional shares of Series A
Preferred Stock. The holders of Series A Preferred Stock are able to convert the
shares of Series A Preferred Stock into Common Stock at a price equal to the
lower of: (i) $18.30 (to be adjusted to reflect stock splits, stock dividends or
similar events); or (ii) 85% of the average closing bid price for the common
stock for the five trading days prior to the conversion date.

If the conversion of the Series A Preferred Stock would result in the
holders receiving more than 2,500,000 shares of Common Stock, then the Company
may redeem any shares of Series A Preferred Stock in excess of 2,500,000 shares
at a redemption price equal to: (i) 117% of the Stated Value of the shares; plus
(ii) any accrued and unpaid dividends on such shares. Any shares of Series A
Preferred Stock which have not been converted on or before August 8, 2000 (the
"Maturity Date") will automatically be converted to shares of Common Stock at
the Maturity Date. However, if, at the Maturity Date any of the

<PAGE> 35

"Mandatory Conversion Conditions" are not satisfied, then the Company will be
required to pay the holders of Series A Preferred Stock cash in an amount equal
to the Liquidation Preference for each share of Series A Preferred Stock owned
by the holder. "Mandatory Conversion Conditions" include: (i) a registration
statement covering the resale of all of the shares of Common Stock issuable
upon conversion of the Series A Preferred Stock is effective, or such resale
may be made under Rule 144(k) under the Securities Act.

The Series A Preferred Stock does not grant holders voting rights
except that, so long as the Series A Preferred Stock is outstanding, without the
prior approval of the holders of at least a majority of all shares of the Series
A Preferred Stock outstanding at the time, the Company may not: (i) increase the
number of shares of Series A Preferred Stock which the Company is authorized to
issue; (ii) alter or change the rights, preferences or privileges of the Series
A Preferred Stock or any other capital stock of the Company so as to adversely
affect the Series A Preferred Stock; or (iii) create any new class or series of
capital stock having a preference over the Series A Preferred Stock as to
distribution of assets upon liquidation, dissolution or winding up of the
Company. Approval of holders of the Series A Preferred Stock as to actions
described in (ii) and (iii) above will not be required if the average closing
price for the Common Stock on the five trading days immediately preceding the
effective date of such a change is equal to or exceeds $27.45 per share.

The Series B Preferred Stock has a liquidation preference equal to
$1,000 per share plus any accrued and unpaid dividends. Upon the liquidation,
dissolution or winding up of the Company, holders of the Series B Preferred
Stock are entitled to receive payment of the liquidation preference on a pro
rata basis based on the Liquidation Preference of the stock held by each holder
before any payment is made to holders of Common Stock or any stock of the
Company junior to the Series B Preferred Stock.

Dividends on the Series B Preferred Stock accrue, whether or not
declared by the Board of Directors, at an annual rate of 4.5% of the Stated
Value of each outstanding share of Series B Preferred Stock. Dividends and are
payable in cash or, at the Company's option, and upon satisfaction of certain
conditions, in additional shares of Series B Preferred Stock.

The holders of Series B Preferred Stock may convert shares of Series B
Preferred Stock into Common Stock at a price equal to the lowest of: (i) 120% of
the closing bid price for the Common Stock on the date of purchase of the Series
B Preferred Stock (to be adjusted to reflect stock splits, stock dividends or
similar events) (the "Fixed Conversion Price"); (ii) 92.5% of the average
closing bid price for the Common Stock for the five trading days prior to the
date of the conversion notice; or (iii) if applicable, the lowest traded price
of the Common Stock during the time when the Common Stock is not listed on the
Nasdaq National Market or listed on the New York Stock Exchange or other
national securities exchange.

If the conversion of the Series B Stock would result in the holders
receiving more than 2,000,000 Shares of Common Stock, then the Company may
redeem any shares of Series B Stock in excess of

<PAGE> 36

2,000,000 shares at a redemption price equal to: (i) 117% of the Stated Value of
the shares; plus (ii) any accrued and unpaid dividends on such shares. Any
shares of Series B Preferred Stock which have not been converted within three
years from the date of purchase will automatically be converted to shares of
Common Stock at the maturity date of the Series B Preferred Stock. However, if,
at the maturity date, a registration statement covering the resale of all of the
shares of Common Stock issuable upon conversion of the Series B Preferred Stock
is not effective, and resale may not be made under Rule 144(k) under the
Securities Act, then the Company will be required to pay to the holders of
Series B Preferred Stock cash in an amount equal to the liquidation preference
for the shares of Series B Preferred Stock owned by the holder.

The Series B Preferred Stock does not grant holders voting rights
except that, so long as shares of Series B Preferred Stock are outstanding,
without the prior approval of the holders of at least a majority of all shares
of the Series B Preferred Stock outstanding at the time, the Company may not:
(i) increase the number of shares of Series B Preferred Stock which the Company
is authorized to issue; (ii) alter or change the rights, preferences or
privileges of the Series B Preferred Stock or any other capital stock of the
Company so as to adversely affect the Series B Preferred Stock; or (iii) create
any new class or series of capital stock having a preference over the Series B
Preferred Stock as to distribution of assets upon liquidation, dissolution or
winding up of the Company. Approval of holders of the Series B Preferred Stock
as to actions described in (ii) and (iii) above will not be required if the
average closing price for the Common Stock on the five trading days immediately
preceding the effective date of such a change is equal to or exceeds 150% of the
Fixed Conversion Price.

Certificate of Incorporation and Bylaws. The Company's Certificate of
Incorporation was amended on April 9, 1996 to change the Company's corporate
name to Metal Management, Inc. The directors of the Company are elected each
year at the annual meeting of the stockholders for terms of one year and until
their successors are elected and qualified; existing directors may nominate and
elect qualified persons to fill vacancies on the Board of Directors.

Stockholders' Agreement. Albert A. Cozzi, Frank J. Cozzi and Gregory P.
Cozzi (collectively, the "Cozzi Stockholders"), Samstock, L.L.C. ("Samstock")
and Messrs. Jacobs and Jennings (collectively, the "MTLM Stockholders") and the
Company entered into a stockholders agreement dated as of December 19, 1997 and
having a term of ten years, unless renewed or extended (the "Stockholders
Agreement"). Under the Stockholders Agreement, the Cozzi Stockholders, Samstock
and the MTLM Stockholders have agreed that each group will act in a manner to
cause the nomination of the directors slated for election at each annual
meeting of the Company, five of whom shall be selected by the Cozzi
Stockholders and five of whom shall be selected by the MTLM Stockholders
(provided that each group has agreed to nominate one individual, independent and
unaffiliated from each group or the Company, as part of its slate) and one of
whom shall be selected by Samstock. The Stockholders Agreement further requires
each group to vote for the other group's nominees for election to the Board and
to vote for proposals, if and when presented by the Company, to amend the
Company's organizational documents to require the approval of at least
two-thirds of the Board of Directors to, among other things: (i) amend the
Company's certificate of incorporation or bylaws; (ii) liquidate or merge the
Company; (iii) sell substantially all of the Company's assets; (iv) elect or
remove officers; (v) adopt an annual budget; (vi) borrow funds, sell assets or
make capital expenditures exceeding $5 million; (vii) issue or register the
Company's securities; or (viii) declare or pay any dividends or distributions.
The Stockholders Agreement is attached as an exhibit to this Report.

Transfer Agent and Registrar. The Transfer Agent and Registrar for the
Common Stock is LaSalle National Bank of Chicago.

<PAGE> 37

LEGAL MATTERS

The validity of the Shares offered hereby will be passed upon for the
Company by Shefsky & Froelich Ltd., Chicago, Illinois. Certain attorneys
employed by Shefsky & Froelich Ltd. beneficially own, or have the right to
acquire through exercise of warrants or options granted to such individuals, an
aggregate of approximately 133,000 shares of the Company's Common Stock as of
the date hereof. Certain members of the firm have also received compensation in
the form of warrants for non-legal services partly in connection with certain
financings completed by the Company.

EXPERTS

The consolidated balance sheets and the related consolidated statements
of operations, of cash flows and of changes in stockholders' equity of the
Company and its subsidiaries at March 31, 1997 and October 31, 1995, and the
results of their operations and their cash flows for the year ended March 31,
1997, the five months ended March 31, 1996 and for each of the two years in the
period ended October 31, 1995, incorporated in this Prospectus by reference to
the Company's Annual Report on Form 10-K (as amended) for the fiscal year ended
March 31, 1997, and the Company's Proxy Statement dated November 20, 1997 have
been so incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

The consolidated balance sheets of Cozzi Iron & Metal, Inc. and
subsidiaries as of December 31, 1996 and 1995 and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 1996, incorporated in this Prospectus by
reference to the Company's Proxy Statement, dated November 20, 1997, have been
so incorporated in reliance on the report of Deloitte & Touche LLP, independent
accountants given on the authority of said firm as experts in auditing and
accounting.

The balance sheets of the Isaac Corporation and Ferrex Trading
Corporation and related statements of income, stockholders equity and cash flows
for the years ended December 31, 1994, 1995 and 1996, incorporated in this
Prospectus by reference to the Company's current report on Form 8-K dated June
23, 1997, have been incorporated in reliance on the report of Ernst & Young LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company incorporates by reference herein the following documents
filed pursuant to the Exchange Act under the Company's Exchange Act File No.
0-14836: (i) the Company's Annual Report on Form 10-K (as amended) for the
fiscal year ended March 31, 1997; (ii) the Company's Quarterly Reports on Form
10-Q for the periods ended June 30, 1997 and September 30, 1997; (iii) the
Company's Amended Quarterly Report on Form 10-QA for the period ended September
30, 1997; (iv) the Company's Current Report on Form 8-K dated May 1, 1997
(relating to the Reserve acquisition and including historical and proforma
financial statements of Reserve); (v) the Company's Current Report on Form 8-K
dated June 23, 1997 (relating to the Isaac acquisition and including historical
and pro forma financial statements of Isaac); (vi) the Company's Current Report
on Form 8-K dated August 28, 1997 (relating to the Proler acquisition); (vii)
the Company's Current Report on Form 8-K dated October 24, 1997 (relating to the
reclassification of amounts received from the sale of the Series A

<PAGE> 38

Preferred Stock); (viii) the Company's Proxy Statement dated November 20, 1997;
(ix) the Company's Current Report on Form 8-K dated December 1, 1997 (relating
to the acquisition of Cozzi Iron & Metal, Inc.); and (x) the Company's Current
Report on Form 8-K dated December 18, 1997 (relating to the private equity
placement to Samstock).

All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the Offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a document or information
incorporated or deemed to be incorporated herein by reference shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any subsequently filed document that also is,
or is deemed to be, incorporated herein by reference, modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.

The making of a modifying or superseding statement shall not be deemed
an admission that the modified or superseded statement, when made, constituted a
misrepresentation, an untrue statement of a material fact or an omission to
state a material fact that is required to be stated or that is necessary to make
a statement not misleading in light of the circumstances in which it was made.

The Company hereby undertakes to provide without charge to each person
including any beneficial owner to whom a copy of this Prospectus has been
delivered, upon written or oral request of the person, a copy of any or all of
the foregoing documents or information referred to above that has been
incorporated herein by reference in this Prospectus (other than exhibits to
documents, unless these exhibits are specifically incorporated by reference into
the documents). Requests for these documents should be made to Mr. Robert C.
Larry at the Company's principal executive offices located at 500 North Dearborn
Street, Suite 405, Chicago, Illinois 60610; telephone number (312) 645-0700.

<PAGE> 39

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.

TABLE OF CONTENTS

P A G E
-------
Available Information.....................................................3
The Company...............................................................4
Risk Factors..............................................................8
Use of Proceeds..........................................................20
Selling Stockholders.....................................................20
Plan of Distribution.....................................................31
Description of Capital Stock.............................................33
Legal Matters............................................................36
Experts..................................................................36
Incorporation of Certain Documents
by Reference...........................................................36

METAL MANAGEMENT, INC.

-------------------
PROSPECTUS
-------------------

15,352,779

SHARES OF
COMMON STOCK
($.01 Par Value)

<PAGE> 40

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the estimated expenses payable by the
Registrant in connection with the filing of this Registration Statement. All of
such expenses, other than the filing fee for the Commission, are estimates.

<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee.................................................... $ 68,344
Printing and Engraving Expenses.................................................................. $ 10,000*
Legal Fees and Expenses.......................................................................... $ 25,000*
Accounting Fees and Expenses..................................................................... $ 35,000*
Blue Sky Fees and Expenses....................................................................... $ 0
--------
Total ............................................................................... $138,344
========
</TABLE>

* estimated for purposes of this filing

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Pursuant to the provisions of Section 145(a) of the Delaware General
Corporation Law, the Company has the power to indemnify anyone made or
threatened to be made a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(other than an action by or in the right of the Company) because such person is
or was a director or officer of the Company against expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred in the defense or settlement of such action, suit, or
proceeding, provided that (i) such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the Company's best interest and
(ii) in the case of a criminal proceeding such person had no reasonable cause to
believe his conduct was unlawful.

With respect to an action or suit by or in the right of the Company to
procure a judgment in its favor, Section 145(b) of the Delaware General
Corporation Law provides that the Company shall have the power to indemnify
anyone who was, is, or is threatened to be made a party to a threatened,
pending, or completed action or suit brought by or in the right of the Company
to procure a judgment in its favor because such person is or was a director or
officer of the Company against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit, provided that such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the Company's best interests,
except that no indemnification shall be made in a case in which such person
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought shall have determined upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses.

Indemnification as described above shall only be granted in a specific
case upon a determination that indemnification is proper under the circumstances
using the applicable standard of conduct which is made by (a) a majority of a
quorum of directors who were not parties to such proceeding, (b) independent

S-1

<PAGE> 41

legal counsel in a written opinion if such quorum cannot be obtained or if a
quorum of disinterested directors so directs, or (c) the shareholders of the
Company.

Section 145(g) of the Delaware General Corporation Law permits the
purchase and maintenance of insurance to indemnify directors and officers
against any liability asserted against or incurred by them in any such capacity,
whether or not the Company itself would have the power to indemnify any such
director or officer against such liability. The Company has purchased this type
of insurance, has paid and intends to continue paying the premiums thereon.

The Company's Amended Certificate of Incorporation provides for the
indemnification of directors and officers of the Company to the fullest extent
permitted by Section 145 of the Delaware General Corporation Law, as the same
may be amended or supplemented. The Certificate of Incorporation further
provides that the indemnification provided for therein shall not be exclusive of
any rights to which those indemnified may be entitled under any bylaw,
agreement, vote of shareholders or disinterested directors, or otherwise.

The Amended Certificate of Incorporation also contains a provision that
eliminates the personal liability of the Company's directors to the Company or
its shareholders for monetary damages for breach of fiduciary duty as a
director. The provision does not limit a director's liability for (i) breaches
of duty of loyalty to the Company or its shareholders, (ii) acts or omissions
not in good faith, involving intentional misconduct or involving knowing
violations of law, (iii) the payment of unlawful dividends or unlawful stock
repurchases or redemptions under Section 174 of the Delaware General Corporation
Law, or (iv) transactions in which the director received an improper personal
benefit. Depending on judicial interpretation, the provision may not affect
liability for violations of the federal securities laws.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The Company understands that the staff of the Securities and Exchange
Commission is of the opinion that statutory, charter and contractual provisions
as are described above have no effect on claims arising under the federal
securities laws. The Company is not aware of any material threatened or ongoing
litigation or proceeding that may result in a claim for such indemnification.

ITEM 16. EXHIBITS

The following exhibits are filed as part of this Registration
Statement:

S-2

<PAGE> 42

NUMBER EXHIBIT DESCRIPTION
- ------ -------------------

3.1 Amended Certificate of Incorporation of Metal Management, Inc.
(incorporated by reference to Exhibit 3.1 to the Registrant's
Report on Form 10-Q dated December 31, 1996 and Exhibit 3.1 to
the Registrant's current report on Form 8-K dated December 15,
1997).

3.2 Amended and restated Bylaws as amended through May 24, 1997
(incorporated by reference to Exhibit 3.1 to the Registrant's
Report on Form 10-K for the year ended March 31, 1997).

4.1 Certificate of Designations, Preferences and Rights of Series
A Convertible Preferred Stock of the Company dated August 7,
1997 and filed with the Secretary of State of Delaware on
August 7, 1997 (incorporated by reference to Exhibit 3.3 of
the Company's current report on Form 8-K dated October 24,
1997).

4.2 Certificate of Designations, Preferences and Rights of Series
B Convertible Preferred Stock of the Company dated November
20, 1997 and filed with the Secretary of State of Delaware on
November 20, 1997 (incorporated by reference to Exhibit 3.2 of
the Company's current report on Form 8-K dated December 15,
1997).

4.3 Registration Rights Agreement dated as of June 23, 1997, by
and between Registrant, and the George A. Isaac, III Second
Revocable Trust (incorporated by reference to Exhibit 2.1 of
the Registrant's report on Form 8-K dated July 8, 1997).

4.4 Warrant To Purchase 462,500 Shares dated June 23, 1997, by and
among Registrant, Isaac Acquisition Corporation, the Isaac
Corporation and Ferrex Trading Corporation, Paulding Recycling
Inc., Briquetting Corporation of America and all of their
shareholders, George A. Isaac, III Trustee of the George A.
Isaac, III Second Revocable Trust (incorporated by reference
to Exhibit 2.1 of the Registrant's report on Form 8-K dated
July 8, 1997).

4.5 Warrant To Purchase 105,000 Shares dated May 1, 1997, by and
between Registrant and Paul D. Joseph (incorporated by
reference to Exhibit 2.2 of the Registrant's report on Form
8-K dated May 15, 1997).

4.6 Declaration of Registration Rights dated December 31, 1996, by
Registrant for the benefit of shareholders of Ian MacLeod
(incorporated by reference to Exhibit 2.1 of the Registrant's
report on Form 8-K dated January 1, 1997).

4.7 Declaration of Registration Rights dated as of January 7, 1997
by the Registrant, for the benefit of shareholders of HouTex
Metals Company, Inc. (incorporated by reference to Exhibit 2.2
of the Registrant's report on Form 8-K dated January 7, 1997).

4.8* Amended and Restated Stockholders' Agreement, dated December
19, 1997, by an among T. Benjamin Jennings, Gerard M. Jacobs,
Albert A. Cozzi, Frank J. Cozzi, Gregory P. Cozzi, Samstock,
L.L.C. and the Company.

4.9 Shelf Registration Rights Agreement, dated December 19, 1997,
by and between the Registrant and Samstock, L.L.C.
(incorporated by reference to Exhibit ___ of the Registrant's
report on Form 8-K dated December 18, 1997).

5.1* Opinion of Shefsky & Froelich Ltd. as to the validity of the
Shares.

23.1* Consent of Shefsky & Froelich Ltd. (included in Exhibit 5.1
above).

23.2* Consent of Price Waterhouse LLP.

23.3* Consent of Deloitte & Touche LLP.

23.4* Consent of Ernst & Young LLP.

* Filed herewith.

S-3

<PAGE> 43

ITEM 17. UNDERTAKINGS

(1) The undersigned Registrant hereby undertakes:

(a) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:

(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;

(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in this
Registration Statement;

(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in this Registration Statement or any
material change to such information in this
Registration Statement.

Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do
not apply if the information required to be included in a
post-effective amendment by these paragraphs is contained in periodic
reports filed with or furnished by the Registrant pursuant to Section
13 or 15(d) of the Exchange Act that are incorporated by reference in
this Registration Statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the Offering.

(b) The undersigned Registrant hereby undertakes that,
for purposes of determining any liability under the
Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of
1934 (and where applicable each filing of an employee
benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in this Registration
Statement shall be deemed to be a new registration
statement relating to the securities offered

S-4

<PAGE> 44

therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide
offering thereof.

(h) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange
Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person
of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such
director, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its
counsel, the matter has been settled by controlling
precedent, submit to a court of appropriate
jurisdiction the question whether such
indemnification by it is against public policy as
expressed in the Securities Act and will be governed
by the final adjudication of such issue.

S-5

<PAGE> 45

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this
registration statement or amendment thereto to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on December 29, 1997.

METAL MANAGEMENT, INC.

By: /s/ T. Benjamin Jennings
----------------------------------------------------
T. Benjamin Jennings
Director, Chairman of the Board, Member of Executive
Committee and Chief Development Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement or amendment thereto has been signed by the
following persons in the capacities indicated on December 29, 1997.

Signature Title
- --------- -----

/s/ T. Benjamin Jennings Director, Chairman of the Board, Member of
- -------------------------- Executive Committee and Chief Development
T. Benjamin Jennings Officer

S-6

<PAGE> 46
/s/ Gerard M. Jacobs Director, Member of Executive Committee and
- --------------------------------- Chief Executive Officer
Gerard M. Jacobs

/s/ Donald F. Moorehead, Jr. Director and Vice Chairman of the Board
- ---------------------------------
Donald F. Moorehead, Jr.

/s/ Albert A. Cozzi President and Chief Operating Officer,
- --------------------------------- Director and Member of E.C.
Albert A. Cozzi

/s/ Frank J. Cozzi Vice President and Director
- ---------------------------------
Frank J. Cozzi

/s/ Gregory P. Cozzi Director
- ---------------------------------
Gregory P. Cozzi

/s/ George A. Isaac, III Director, Member of Executive Committee and
- --------------------------------- Executive Vice President
George A. Isaac, III

/s/ William T. Proler Director
- ---------------------------------
William T. Proler

/s/ Harold Rubenstein Director
- ---------------------------------
Harold Rubenstein

/s/ Christopher G. Knowles Director
- ---------------------------------
Christopher G. Knowles

/s/ Robert C. Larry Vice President, Finance, Treasurer and Chief
- --------------------------------- Financial Officer
Robert C. Larry

S-7

<PAGE> 47

EXHIBIT INDEX

NUMBER EXHIBIT DESCRIPTION
- ------ -------------------

3.2 Amended and restated Bylaws as amended through May 24, 1997
(incorporated by reference to Exhibit 3.1 to the Registrant's
Report on Form 10-K for the year ended March 31, 1997).

4.8* Amended and Restated Stockholders' Agreement dated December
19, 1997, by an among T. Benjamin Jennings, Gerard M. Jacobs,
Albert A. Cozzi, Frank J. Cozzi, Gregory P. Cozzi,
Samstock, L.L.C. and the Company.

5.1* Opinion of Shefsky & Froelich Ltd. as to the validity of the
Shares.

23.1* Consent of Shefsky & Froelich Ltd. (included in Exhibit 5.1
above).

23.2* Consent of Price Waterhouse LLP.

23.3* Consent of Deloitte & Touche LLP.

23.4* Consent of Ernst & Young LLP.

* Filed herewith.

S-8

<PAGE> 1
EXHIBIT 4.8

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

This Amended and Restated Registration Rights Agreement (the
"AGREEMENT") is made and entered into as of the 19th day of December, 1997, by
and between Metal Management, Inc., a Delaware corporation (the "COMPANY"), and
T. Benjamin Jennings, Gerard M. Jacobs, Albert A. Cozzi, Frank J. Cozzi,
Gregory P. Cozzi and Samstock, L.L.C., a Delaware limited liability company
(each a "STOCKHOLDER" and collectively the "STOCKHOLDERS").

RECITALS

A. The Stockholders and the Company are parties to that certain
Amended and Restated Stockholders' Agreement dated of even date herewith (the
"STOCKHOLDERS' AGREEMENT"), pursuant to which each Stockholder has agreed to
certain restrictions on the transfer of their shares of common stock, par value
$.01 per share of the Company (the "COMMON STOCK").

B. T. Benjamin Jennings, Gerard M. Jacobs, Albert A. Cozzi, Frank
J. Cozzi, Gregory P. Cozzi, together with the Corporation, entered into a
Registration Rights Agreement dated as of December 1, 1997 (the "ORIGINAL
REGISTRATION RIGHTS AGREEMENT").

C. Pursuant to that certain Securities Purchase Agreement (the
"SECURITIES PURCHASE AGREEMENT") dated as of December 19, 1997, by and between
the Corporation and Samstock, L.L.C., a Delaware limited liability company
(the "PURCHASER"), Purchaser acquired 1,470,588 shares of Common Stock and a
warrant to purchase an additional 600,000 shares of Common Stock.

D. The parties to the Original Registration Rights Agreement
desire to amend and restate the Original Registration Rights Agreement in its
entirety to, among other things, include Purchaser as a party to the Agreement.

NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto agree that the Original Registration
Rights Agreement is amended and restated in its entirety to read as follows:

1. (a) Piggyback Registration. If, at any time during the
five-year period commencing December 1, 1999, the Company shall file a
registration statement (other than a registration statement on Form S-4, Form
S-8, or any successor form) with the Securities and Exchange Commission (the
"COMMISSION") while any Registrable Securities (as hereinafter defined) are
outstanding, the Company shall give all the Stockholders who are then holders
of any Registrable Securities (the "ELIGIBLE HOLDERS") at least 30 days' prior
written notice of the filing of such registration statement. If requested by
an Eligible Holder in writing within 20 days after receipt of any such notice,
the Company shall, at the Company's sole expense (other than the fees and
disbursements of counsel for the Eligible Holders, and the underwriting
discounts, if any, payable in respect of the Registrable Securities sold by any
Eligible Holder), register all or, at each Eligible Holder's option, any
portion of the Registrable Securities of any Eligible Holders who shall
have made such request, concurrently with the registration of such other
securities, all to the extent requisite to permit the public offering and sale
of the Registrable
<PAGE> 2

Securities through the facilities of all appropriate securities exchanges,
if any, on which the Company's Common Stock is being sold or on the
over-the-counter market, and will use its best efforts through its officers,
directors, auditors, and counsel to cause such registration statement to become
effective as promptly as practicable. Notwithstanding the foregoing, if the
managing underwriter of any such offering shall advise the Company in writing
that, in its opinion, the distribution of all or a portion of the Registrable
Securities requested to be included in the registration concurrently with the
securities being registered by the Company would materially adversely affect
the distribution of such securities by the Company for its own account, then
any Eligible Holder who shall have requested registration of his or its
Registrable Securities shall delay the offering and sale of such Registrable
Securities (or the portions thereof so designated by such managing
underwriter) for such period, not to exceed 120 days (the "DELAY PERIOD"), as
the managing underwriter shall request. As used herein, "REGISTRABLE
SECURITIES" shall mean (i) the shares of Common Stock owned by the Stockholders
on the date hereof as set forth on Schedule 1(a) and (ii) the shares of Common
Stock for which the options and warrants listed on Schedule 1(a) are exercised,
which, with respect to each Stockholder, have not been previously sold pursuant
to a registration statement or Rule 144 promulgated under the Securities Act of
1933, as amended (the "SECURITIES ACT").

(b) Demand Registration. If, at any time during the
five-year period commencing December 1, 1999, the Company shall receive a
written request from Eligible Holders who in the aggregate own at least 25% of
the total number of shares of Common Stock then included (or upon such
exercises would be included) in the Registrable Securities (the "MAJORITY
HOLDERS"), to register the sale of all or part of such Registrable Securities,
the Company shall, as promptly as practicable, at the Company's sole cost and
expense (other than the fees and disbursements of counsel for the Eligible
Holders, and the underwriting discounts if any, payable in respect of the
Registrable Securities sold by the Eligible Holders), prepare and file with the
Commission a registration statement sufficient to permit the public offering
and sale of the Registrable Securities through the facilities of all
appropriate securities exchanges, if any, on which the Company's Common Stock
is being sold or on the over-the-counter market, and will use its best efforts
through its officers, directors, auditors, and counsel to cause such
registration statement to become effective as promptly as practicable;
provided, however, that the Company shall only be obligated to file one such
registration statement; provided further, however, that if an undersigned
Eligible Holder does not offer to include any portion of its Registrable
Securities in the registration statement so prepared, then such Eligible Holder
shall be entitled to one separate demand covering all of his Registrable
Securities which have not been previously sold pursuant to Rule 144 under the
Securities Act. The Company shall not be obligated to effect any registration
of its securities pursuant to this Section 1(b) within nine months after the
effective date of a previous registration statement prepared and filed in
accordance with Section 1(a) or 1(b). Within three business days after
receiving any request contemplated by this Section 1(b), the Company shall give
written notice to all the other Eligible Holders, advising each of them that
the Company is proceeding with such registration and offering to include
therein all or any portion of any such other Eligible Holder's Registrable
Securities, provided that the Company receives a written request to do so from
such Eligible Holder within 30 days after receipt by him or it of the Company's
notice.

2
<PAGE> 3

(c) In the event of a registration pursuant to the
provisions of this Section 1, the Company shall use its best efforts to cause
the Registrable Securities so registered to be registered or qualified for sale
under the securities or blue sky laws of such jurisdictions as the Eligible
Holder or such holders may reasonably request; provided, however, that the
Company shall not be required to qualify to do business in any state by reason
of this Section 1(c) in which it is not otherwise required to qualify to do
business.

(d) The Company shall keep effective any registration or
qualification contemplated by this Section 1 and shall from time to time amend
or supplement each applicable registration statement, preliminary prospectus,
final prospectus, application, document and communication for such period of
time as shall be required to permit the Eligible Holders to complete the offer
and sale of the Registrable Securities covered thereby. The Company shall in
no event be required to keep any such registration or qualification in effect
for a period in excess of nine months from the date on which the Eligible
Holders are first free to sell such Registrable Securities; provided, however,
that, if the Company is required to keep any such registration or qualification
in effect with respect to securities other than the Registrable Securities
beyond such period, the Company shall keep such registration or qualification
in effect as it relates to the Registrable Securities for so long as such
registration or qualification remains or is required to remain in effect in
respect of such other securities.

(e) In the event of a registration pursuant to the
provisions of this Section 1, the Company shall furnish to each Eligible Holder
such number of copies of the registration statement and of each amendment and
supplement thereto (in each case, including all exhibits), such reasonable
number of copies of each prospectus contained in such registration statement
and each supplement or amendment thereto (including each preliminary
prospectus), all of which shall conform to the requirements of the Securities
Act and the rules and regulations thereunder, and such other documents, as any
Eligible Holder may reasonably request to facilitate the disposition of the
Registrable Securities included in such registration.

(f) In the event of a registration pursuant to the
provisions of this Section 1, the Company shall furnish each Eligible Holder of
any Registrable Securities so registered with an opinion of its counsel
(reasonably acceptable to the Eligible Holders) to the effect that (i) the
registration statement has become effective under the Securities Act and no
order suspending the effectiveness of the registration statement, preventing or
suspending the use of the registration statement, any preliminary prospectus,
any final prospectus, or any amendment or supplement thereto has been issued,
nor has the Commission or any securities or blue sky authority of any
jurisdiction instituted or threatened to institute any proceedings with respect
to such an order, (ii) the registration statement and each prospectus forming a
part thereof (including each preliminary prospectus), and any amendment or
supplement thereto, comply as to form with the Securities Act and the rules and
regulations thereunder, and (iii) such counsel has no knowledge of any material
misstatement or omission in such registration statement or any prospectus, as
amended or supplemented. Such opinion shall also state the jurisdictions in
which the Registrable Securities have been registered or qualified for sale
pursuant to the provisions of Section 1(c).

3
<PAGE> 4

(g) The Company agrees that until all the Registrable
Securities have been sold under a registration statement or pursuant to Rule
144 under the Securities Act, it shall use its best efforts to keep current in
filing all reports, statements and other materials required to be filed with
the Commission to permit holders of the Registrable Securities to sell such
securities under Rule 144.

(h) The Company shall notify the Eligible Holders of the
Registrable Securities promptly when such registration statement has become
effective or a supplement to any prospectus forming a part of such registration
statement has been filed.

(i) The Company shall promptly notify the Eligible
Holders of the Registrable Securities at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event as a result of which the prospectus included in such registration
statement, as then in effect, would include an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing, and at the reasonable request of the Eligible
Holders of the Registrable Securities prepare and furnish to them such number
of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances under which they were made.

(j) If requested by the underwriter for any underwritten
offering of Registrable Securities on behalf of an Eligible Holder of
Registrable Securities pursuant to a registration requested under Section 1(b),
the Company and such Eligible Holder of Registrable Securities will enter into
an underwriting agreement with such underwriter for such offering, which shall
be reasonably satisfactory in substance and form to the Company and the
Company's counsel, such Eligible Holder of Registrable Securities and the
underwriter, and such agreement shall contain such representations and
warranties by the Company and such Eligible Holder of Registrable Securities
and such other terms and provisions as are customarily contained in an
underwriting agreement with respect to secondary distributions solely by
selling stockholders, including, without limitation, indemnities substantially
to the effect and to the extent provided in Section 2 hereof.

2. Indemnification. (a) Subject to the conditions set forth
below, the Company agrees to indemnify and hold harmless each Eligible Holder,
its officers, directors, partners, employees, agents, and counsel, and each
person, if any, who controls any such person within the meaning of Section 15
of the Securities Act or Section 20(a) of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), from and against any and all loss, liability,
charge, claim, damage, and expense whatsoever (which shall include, for all
purposes of this Section 2, but not be limited to, reasonable attorneys' fees
and any and all reasonable expenses whatsoever incurred in investigating,
preparing, or defending against any litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation),

4
<PAGE> 5

as and when incurred, arising out of, based upon, or in connection with (i) any
untrue statement or alleged untrue statement of a material fact contained (A)
in any registration statement, preliminary prospectus, or final prospectus (as
from time to time amended and supplemented), or any amendment or supplement
thereto, relating to the sale of any of the Registrable Securities or (B) in
any application or other document or communication (in this Section 2
collectively called an "APPLICATION") executed by or on behalf of the Company
or based upon written information furnished by or on behalf of the Company
filed in any jurisdiction in order to register or qualify any of the
Registrable Securities under the securities or blue sky laws thereof or filed
with the Commission or any securities exchange; or any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements made therein not misleading, unless (x) such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company with respect to such Eligible Holder by or on behalf
of such person expressly for inclusion in any registration statement,
preliminary prospectus, or final prospectus, or any amendment or supplement
thereto, or in any application, as the case may be, or (y) such loss,
liability, charge, claim, damage or expense arises out of such Eligible
Holder's failure to comply with the terms and provisions of this Agreement, or
(ii) any breach of any representation, warranty, covenant, or agreement of the
Company contained in this Agreement. The foregoing agreement to indemnify
shall be in addition to any liability the Company may otherwise have, including
liabilities arising under this Agreement.

If any action is brought against any Eligible Holder or any of
its officers, directors, partners, employees, agents, or counsel, or any
controlling persons of such person (an "INDEMNIFIED PARTY") in respect of which
indemnity may be sought against the Company pursuant to the foregoing
paragraph, such indemnified party or parties shall promptly notify the Company
in writing of the institution of such action (but the failure so to notify
shall not relieve the Company from any liability other than pursuant to this
Section 2(a)) and the Company shall promptly assume the defense of such action,
including the employment of counsel (reasonably satisfactory to such
indemnified party or parties), provided that the indemnified party shall have
the right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless the employment of such counsel shall have been authorized in
writing by the Company in connection with the defense of such action or the
Company shall not have promptly employed counsel reasonably satisfactory to
such indemnified party or parties, or such indemnified party or parties shall
have reasonably concluded that there may be one or more legal defenses
available to it or them or to other indemnified parties which are different
from or additional to those available to the Company, in any of which events
such fees and expenses shall be borne by the Company and the Company shall not
have the right to direct the defense of such action on behalf of the
indemnified party or parties. Anything in this Section 2 to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its written consent, which shall not be
unreasonably withheld. The Company shall not, without the prior written
consent of each indemnified party that is not released as described in this
sentence, settle or compromise any action, or permit a default or consent to
the entry of judgment in or otherwise seek to terminate any pending or
threatened action, in respect of which indemnity may be sought hereunder
(whether or not any indemnified party is a party thereto), unless such

5
<PAGE> 6

settlement, compromise, consent, or termination includes an unconditional
release of each indemnified party from all liability in respect of such action.
The Company agrees promptly to notify Eligible Holders of the commencement of
any litigation or proceedings against the Company or any of its officers or
directors in connection with the sale of any Registrable Securities or any
preliminary prospectus, prospectus, registration statement, or amendment or
supplement thereto, or any application relating to any sale of any Registrable
Securities.

(b) Each Eligible Holder agrees to indemnify and hold
harmless the Company, each director of the Company, each officer of the Company
who shall have signed any registration statement covering Registrable
Securities held by such Eligible Holder, each other person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, and its or their respective counsel, to the
same extent as the foregoing indemnity from the Company to such Eligible Holder
in Section 2(a), but only with respect to statements or omissions, if any, made
in any registration statement, preliminary prospectus, or final prospectus (as
from time to time amended and supplemented), or any amendment or supplement
thereto, or in any application, in reliance upon and in conformity with written
information furnished to the Company with respect to such Eligible Holder by or
on behalf of such Eligible Holder, expressly for inclusion in any such
registration statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, as the case may be. If
any action shall be brought against the Company or any other person so
indemnified based on any such registration statement, preliminary prospectus,
or final prospectus or any amendment or supplement thereto, or in any
application, and in respect of which indemnity may be sought against such
Eligible Holder pursuant to this Section 2(b), such Eligible Holder shall have
the rights and duties given to the Company, and the Company and each other
person so indemnified shall have the rights and duties given to the indemnified
parties, by the provisions of Section 2(a).

(c) To provide for just and equitable contribution, if
(i) an indemnified party makes a claim for indemnification pursuant to Section
2(a) or 2(b) (subject to the limitations thereof) but it is found in a final
judicial determination, not subject to further appeal, that such
indemnification may not be enforced in such case, even though this Agreement
expressly provides for indemnification in such cases, or (ii) any indemnified
or indemnifying party seeks contribution under the Securities Act, the Exchange
Act or otherwise, then the Company (including for this purpose any contribution
made by or on behalf of any director of the Company, any officer of the Company
who signed any such registration statement, any controlling person of the
Company, and its or their respective counsel), as one entity, and the Eligible
Holders of the Registrable Securities, included in such registration in the
aggregate (including for this purpose any contribution by or on behalf of an
indemnified party), as a second entity, shall contribute to the losses,
liabilities, claims, damages, and expenses whatsoever to which any of them may
be subject, on the basis of relevant equitable considerations such as the
relative fault of the Company and such Eligible Holders in connection with the
facts which resulted in such losses, liabilities, claims, damages, and
expenses. The relative fault, in the case of an untrue statement, alleged
untrue statement, omission, or alleged omission shall be determined by, among
other things, whether such statement, alleged statement, omission, or alleged
omission relates to information

6
<PAGE> 7

supplied by the Company or by such Eligible Holders, and the parties' relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement, alleged statement, omission, or alleged omission. The Company
and Eligible Holders agree that it would be unjust and inequitable if the
respective obligations of the Company and the Eligible Holders for contribution
were determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages, and expenses (even if each Eligible Holder and
the other indemnified parties were treated as one entity for such purpose) or
by any other method of allocation that does not reflect the equitable
considerations referred to in this Section 2(c). In no case shall any Eligible
Holder be responsible for a portion of the contribution obligation imposed on
all Eligible Holders in excess of its pro rata share based on the number of
shares of Common Stock owned by him and included in such registration as
compared to the number of shares of Common Stock owned by all Eligible Holders
and included in such registration. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. For purposes of this Section 2(c), each person,
if any, who controls any Eligible Holder within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act and each officer,
director, partner, employee, agent, and counsel of Eligible Holder or control
person shall have the same rights to contribution as such Eligible Holder or
control person and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, each officer of the Company who shall have signed any such registration
statement, each director of the Company, and its or their respective counsel
shall have the same rights to contribution as the Company, subject in each case
to the provisions of this Section 2(c). Anything in this Section 2(c) to the
contrary notwithstanding, no party shall be liable for contribution with
respect to the settlement of any claim or action effected without its written
consent. This Section 2(c) is intended to supersede any right to contribution
under the Securities Act, the Exchange Act or otherwise.

3. Miscellaneous.

(a) Remedies. In the event of a breach by the Company of
its obligations under this Agreement, each Stockholder, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.

(b) Agreements and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, unless such amendment, modification or supplement is
in writing and signed by the parties hereto.

(c) Notices. All notices and other communications
provided for or permitted hereunder shall be made in accordance with the
provision of the Stockholders' Agreement.

(d) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation

7
<PAGE> 8

and without the need for an express assignment, subsequent holders of the
Registrable Securities subject to the terms hereof.

(e) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.

(f) Headings. The headings in this Agreement are for
convenience of references only and shall not limit or otherwise affect the
meaning hereof.

(g) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Illinois without
reference to its conflicts of law provisions.

(h) Severability. In the event that any one or more of
the provisions contained herein, or the application hereof in any circumstance
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provisions contained herein shall not be affected or
impaired thereby.

(i) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of this agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises warranties or undertakings, other than those set forth
or referred to herein, concerning the registration rights granted by the
Company pursuant to this Agreement.

8
<PAGE> 9

IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.

METAL MANAGEMENT, INC.

By: /s/ T. Benjamin Jennings
-------------------------
T. Benjamin Jennings, Chairman and
Chief Development Officer

/s/ T. Benjamin Jennings
-------------------------
T. BENJAMIN JENNINGS

/s/ Gerard M. Jacobs
-------------------------
GERARD M. JACOBS

/s/ Albert A. Cozzi
-------------------------
ALBERT A. COZZI

/s/ Frank J. Cozzi
-------------------------
FRANK J. COZZI

/s/ Gregory P. Cozzi
-------------------------
GREGORY P. COZZI

SAMSTOCK, L.L.C., a Delaware limited
liability company

By: SZ Investments, L.L.C., it managing
member

By: Zell General Partnership, Inc., its
managing member

By: /s/ Sam Zell
------------------
Name:
------------------
Title:
------------------

<PAGE> 1
EXHIBIT 5.1

LAW OFFICES
SHEFSKY & FROELICH LTD.
444 NORTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60611
__________

TELEPHONE (312) 527-4000
FACSIMILE (312) 527-5921
E-MAIL [email protected]

December 29, 1997

Metal Management, Inc.
500 North Dearborn
Suite 405
Chicago, Illinois 60610

Gentlemen:

We have acted as your special counsel in connection with the
preparation and filing of a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). The Registration Statement relates to an aggregate of
15,352,779 shares of the Company's common stock, par value $0.01 per share, a
total of 8,742,777 of which are outstanding on the date hereof, and a total of
6,610,002 shares which are issuable upon conversion of Series A Preferred Stock
and Series B Preferred Stock (each as defined in the Registration Statement),
and exercise of warrants previously granted by the Company.

In rendering this opinion, we have examined such corporate records,
documents, instruments and certificates of the Company, have received and
reviewed representations from the officers and directors of the Company and have
reviewed those questions of law as we have deemed necessary, relevant or
appropriate to enable us to render the opinion expressed herein. In our
examination, we have assumed the genuineness of all signatures and authenticity
of all documents, instruments, records and certificates submitted to us as
originals, the genuineness of all signatures on documents reviewed by us and the
legal capacity of natural persons executing such documents, instruments, records
and certificates.

We are admitted to practice law in the State of Illinois and,
accordingly, we do not purport to be experts on the laws of any other
jurisdiction nor do we express an opinion as to the laws or jurisdictions other
than the laws of the State of Illinois, and the Delaware General Corporation
Law, all as currently in effect.

We call your attention to the fact that certain attorneys employed by
our firm beneficially own, or have the right to acquire through the exercise of
warrants or options granted to such individuals, an aggregate of 133,000 shares
of the Company's common stock. In addition, certain

<PAGE> 2
SHEFSKY & FROELICH LTD.

Metal Management, Inc.
December 29, 1997
Page 2

members of the firm have received compensation in the form of warrants for
non-legal services in connection with certain issuances of securities by the
Company.

Based upon our examination and review and upon the representations made
to us by the officers and directors of the Company, we are of the opinion that:
(i) the Shares currently outstanding and offered for sale on the terms and
conditions set forth in the Registration Statement have been duly and validly
authorized and are validly issued, fully-paid and nonassessable; and (ii) the
Shares issuable upon exercise of options or warrants or upon conversion of
Series A Preferred Stock and Series B Preferred Stock (the options, warrants,
Series A Preferred Stock and Series B Preferred Stock are collectively referred
to herein as the "Derivative Securities") have been duly authorized for issuance
and when issued in conformity with the documents governing the issuance of the
Derivative Securities will be validly issued, fully-paid and nonassessable.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement. In
giving this consent we do not thereby admit that we are within the category of
persons whose consent is required under Section 7 of the Securities Act and the
Rules and Regulations of the Securities and Exchange Commission thereunder.

Very truly yours,

/s/ SHEFSKY & FROELICH LTD.

SHEFSKY & FROELICH LTD.

MJC/SMS/gm

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of the following:
our report dated May 21, 1997, except as to Notes 16 and 17 which are as of June
19, 1997, appearing on page F-1 of Metal Management, Inc.'s Annual Report on
Form 10-K for the year ended March 31, 1997 and also appearing on page F-1 of
Metal Management, Inc.'s Proxy Statement dated November 20, 1997; our report
dated March 14, 1997, except as to Note 10 which is as of May 1, 1997, relating
to the financial statements of Reserve Iron and Metal Limited Partnership,
appearing in Metal Management, Inc.'s Current Report on Form 8-K dated May 2,
1997 and filed May 15, 1997; and, our report dated April 17, 1997 relating to
the financial statements of Proler Southwest, Inc. and Proler Steelworks L.L.C.
appearing on page F-52 of Metal Management, Inc.'s Proxy Statement dated
November 20, 1997. We also consent to the reference to us under the heading
"Experts" in such Prospectus.

PRICE WATERHOUSE LLP

Chicago, Illinois
December 29, 1997

<PAGE> 1
EXHIBIT 23.3

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Registration Statement of
Metal Management, Inc. on Form S-3 of our report on the Cozzi Iron & Metal, Inc.
financial statements dated April 22, 1997, appearing in the Proxy Statement of
Metal Management, Inc. dated November 20, 1997.

Deloitte & Touche LLP
Chicago, Illinois
December 29, 1997

<PAGE> 1
EXHIBIT 23.4

Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statement
(Form S-3) and related Prospectus of Metal Management, Inc. dated December 29,
1997 for the registration of 15,352,779 shares of its common stock of our
report dated February 28, 1997 (except Note 8, as to which the date is June 23,
1997) with respect to the financial statements of The Isaac Corporation and of
our report dated February 28, 1997 (except Note 9, as to which the date is June
23, 1997) with respect to the financial statements of Ferrex Trading
Corporation, included as Exhibits 99.1 and 99.2 in Metal Management, Inc.'s
Current Report on form 8-K dated July 8, 1997, filed with the Securities and
Exchange Commission.

ERNST & YOUNG LLP

Toledo, Ohio
December 26, 1997