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Organic Resource Management Inc. Announces Sale of Non-Core Assets of A&A Anderson Tank Service Ltd.
download pdfOrganic Resource Management Inc. Announces Sale of Non-Core Assets of A&A Anderson Tank Service Ltd.
Toronto, ON, October 9, 2008 - Organic Resource Management Inc. (TSX: ORI) ("ORMI" or "the Company"), announced today that it has agreed to sell the non-core assets of its wholly-owned subsidiary, A&A Anderson Tank Services Ltd. ("A&A"), based in British Columbia, to McRae's Environmental Services Ltd. ("McRae's") for a total purchase price of $2,075,000. ORMI will retain A&A assets related to its grease interceptor and organic recycling business.
"The sale of these non-core assets will allow us to strengthen our balance sheet as we continue to position our company to focus on our core business of servicing grease interceptors and collecting and recycling organic residuals," said Charles Buehler, Chief Executive Officer of ORMI. "In British Columbia, we plan to continue the efforts we have begun in Ontario to capture and channel organic waste to anaerobic digesters, in order to provide a sustainable and environmentally friendly source of renewable energy for the people of British Columbia."
Under the terms of the agreement, McRae's will purchase 17 trucks and trailers, A&A's customer list for its non-core business, as well as the A&A name. As part of the sale transaction ORMI will acquire McRae's list of customers in ORMI's core area of business. On closing, which is scheduled for Oct 31, 2008, McRae's will assume capital lease liabilities of $272,000 related to certain trucks, make a cash payment to ORMI of $1,228,000 and provide a note payable to ORMI for $575,000. The note will be secured by a first charge on certain trucks and is repayable in 55 equal installments of principal with interest at prime plus 0.25%. The asset sale will generate a gain on disposal to ORMI of approximately $1.7 million.
The assets related to the grease interceptor and organic recycling business of A&A are being re-branded as ORMI and will continue to operate in the Lower Mainland area of British Columbia, where the Company will focus on growing its core business. The proceeds of the A&A asset sale will be used to strengthen ORMI's balance sheet and pay down its operating line of credit, as the Company continues to expand its organic recycling business and its network of farm-based anaerobic digesters.
Revenue generated from A&A's non-core customers was approximately $3.1 million in fiscal 2008 and contributed to earnings. Management believes that the reduction in Company revenue and earnings resulting from this transaction will be partially offset by the acquisition of McRae's customer list in ORMI's core business (approximately $300,000 per year) as well as interest savings from the reduction of the Company's debt and other measures that will be undertaken to reduce overhead, but the final impact on the Company's revenues and earnings is not presently determinable.
In addition to the asset sale, ORMI announced that its British Columbia operations will be moving to a new Vancouver area service hub located on Annacis Island, where it will expand its grease trap and organics collection business. The new facility is properly zoned for commercial organic recycling and collection and includes the necessary infrastructure required to establish an organic residuals processing facility similar to ORMI's Ontario facilities. The Company plans to use this facility to produce the same type of high-energy feedstock for anaerobic digestion as it does in Ontario.
About Organic Resource Management Inc.
Organic Resource Management (TSX: ORI) is Canada's largest provider of vacuum truck services for the collection, treatment and disposal of organic and other non-hazardous liquid waste. ORMI services in excess of 8,000 commercial, industrial, institutional and residential customers in Ontario, Quebec, and British Columbia. Further information about ORMI may be obtained at the Company's web site: www.ormi.com.
For further information, contact:
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Organic Resource Management Inc. Charles Buehler CEO Tel: 416-580-8574 Email: cbuehler@organicresourcemanagement.com Website: www.ormi.com |
The Equicom Group Glen Williams Investor Relations Tel: 416-815-0700 ext. 272 Email: gwilliams@equicomgroup.com |
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