TORONTO, Oct. 9 /CNW/ - 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:
For further information: Organic Resource Management Inc., Charles
Buehler, CEO, Tel: (416) 580-8574, Email:
email@example.com, Website: www.ormi.com; The Equicom
Group, Glen Williams, Investor Relations, Tel: (416) 815-0700 ext. 272, Email: