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MONTREAL, March 15, 2019 /CNW Telbec/ - Ecolomondo Corporation (TSXV: ECM) (the "Company" or "Ecolomondo") is pleased to announce that it has entered into a conditional purchase agreement with respect to the acquisition of Gestion Transport Lyon Inc. ("Transport Lyon") by a combination of share issuance and working capital contribution into Transport Lyon (the "Transaction").
The closing of the contemplated Transaction, subject among other conditions to satisfactory legal and financial due diligence, is expected to take place by April 30, 2019. Once completed, Transport Lyon will become a wholly-owned subsidiary of Ecolomondo and should immediately contribute significant revenues to Ecolomondo.
Transport Lyon is a large Montreal-based transport company that offers specialized transportation and is an authorized collector of used tires for the government agency Recyc-Quebec. Transport Lyon owns and operates a large fleet of vehicles, provides quality service and has an enviable reputation in the transport industry.
Vertical integration of Transport Lyon will bring to Ecolomondo a strong market presence and solidify its position in the scrap tire industry in Quebec.
Ecolomondo's growth strategy is to be a full service company, from collection, shredding to processing of scrap tire waste to recover resources to be re-used by industry.
Management believes that vertical integration of scrap tire transporters and recyclers by Ecolomondo will allow Thermal Decomposition Process ("TDP") turnkey plants to secure increased feedstocks, higher tipping fees and reduce costs by taking advantage of economies of scale and improved efficiency.
The Transaction does not result in a change in control of the Company, as defined in applicable securities laws, is made at arm's length and no finder's fee is payable under the Transaction.
Based on the terms and conditions provided in the offer to purchase, the Company will inject upon closing an amount C$700,000 of working capital into Transport Lyon. A further amount of C$1,400,000 will be paid by the Company as follows: C$300,000 worth of Ecolomondo stock, C$100,000 in other compensation and a balance of sale of C$1,000,000 to be repaid from future profits (using a formula of 25% of profits above C$250,000 per year), starting with the financial results for the period ending October 31, 2021.
As part of the Transaction, Ecolomondo will assume C$ 2,050,000 of long term debt that was taken mostly for the purchase of new vehicles, bringing the total commitments of the transaction to C$ 4.15 million.
For the fiscal years ended October 31, 2018 and 2017, Transport Lyon had revenues of C$11.2 and C$11.8 million, generated profits after taxes of C$187,000 and C$700,000, and had EBITDA of C$1.07 and C$1.61 million, respectively.
Upon closing of the Transaction, current management of Transport Lyon is expected to remain in place with Simon Choquette to continue as Chief Executive Officer.
Closing of the Transaction is subject to various conditions, including but not limited to the completion of a definitive share purchase agreement and TSX Venture Exchange approval.
About Ecolomondo Corporation
Ecolomondo is a cleantech Canadian company that is commercializing its waste-to-products technology. The Thermal Decomposition Process ("TDP") converts hydrocarbon waste into marketable commodity end-products, namely carbon black substitute, oil, gas and steel. Technologies such as Ecolomondo's are expected to play an important role in resource recovery needed in today's circular economy.
Management believes that technological breakthroughs in areas of emissions, process optimization, automation, end-product processing and safety, position Ecolomondo to become an industry leader.
The Company's main revenues will come from the sale of TDP turnkey facilities and royalties from their operations. TDP facilities will generate revenues from the sale of end-products, tipping fees and carbon credits. Ecolomondo's first focus is to market TDP turnkey facilities that use scrap tires as a feedstock, because scrap tires yield end-products with a higher commercial value, especially the recycled carbon black.
Cautionary Note Regarding Forward Looking Statements
The information in this news release includes certain information and statements about management's view of future events, expectations, plans and prospects that constitute forward looking statements. These statements are based upon assumptions that are subject to significant risks and uncertainties. Because of these risks and uncertainties and as a result of a variety of factors, the actual results, expectations, achievements or performance may differ materially from those anticipated and indicated by these forward looking statements. Although Ecolomondo believes that the expectations reflected in forward looking statements are reasonable, it can give no assurances that the expectations of any forward looking statements will prove to be correct. Except as required by law, Ecolomondo disclaims any intention and assumes no obligation to update or revise any forward looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward looking statements or otherwise.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Ecolomondo Corp
For further information: Elio Sorella, Chairman and Chief Executive Officer, Ecolomondo, Tel: (450) 587-5999, firstname.lastname@example.org