NCS completes deal to purchase waste management firms
National Challenge Systems Inc NLC
Shares issued 19,622,856 Feb 25 close $2.20
Mon 28 Feb 2000 News Release
Mr. Floyd Wandler reports
National Challenge Systems Inc. has executed a series of agreements to
purchase three Canadian companies that are actively engaged in the
collection, processing and disposal of non-hazardous liquid organic waste.
These agreements position NCS to aggressively pursue this major sector of
the waste management industry.
Under these agreements, which are subject to the successful completion of a
$20-million equity placement, shareholder approval for the purchases and
for the financing, and regulatory approval, NCS will purchase the entire
share capital of the following companies.
Organic Resource Management Inc. (ORMI), a private Ontario corporation that
operates Ontario's largest vacuum truck fleet dedicated to the collection
and recycling of non-hazardous liquid organic wastes, chiefly fats, oils
and greases. ORMI presently serves over 3,500 food service customers.
Purchase price: $7.2-million.
A&A Anderson Tank Service (Vancouver) Limited (A&A), a private
Vancouver-based corporation that operates the largest vacuum truck fleet in
the Greater Vancouver area. Established in 1962, A&A currently serves over
2,500 customers. Purchase price: $3.4-million.
Organic Resource Technologies Inc. (ORTI), a private Toronto-based
corporation that holds a Canadian patent for its land application system
for liquid organic wastes. ORTI also has a Canadian patent pending for its
Organic Resource Recovery System. This system consists of a self-contained
unit that is placed on the premises of organic waste producers such as
grocery stores, food processors, hotels and restaurants. These units grind
and liquify organic waste. The resulting "slurry" is stored on-site in a
sealed tank until a vacuum truck removes it. Organic waste recovered in
this way is subsequently reused as fertilizer, compost or as a soil
amendment (through ORTI's patented direct land application process).
Management is unaware of any similar competitive technology that is as
beneficial to the environment and cost-effective. ORTI purchase price:
$2.17-million.
The shareholders of ORMI and A&A have agreed to receive partial
consideration for their shares in exchange for common shares of NCS at a
value of $2.27 per share.
The balance of the proceeds from the equity placement that NCS is
undertaking, net of expenses, will be taken into working capital. The
company will use its working capital to grow the organic waste recovery
business and to continue to grow its rental fleet of waste equipment.
Management anticipates that it will be able to secure the financing and
achieve the shareholder and regulatory approvals required to successfully
conclude these transactions.
The impact of these transactions on NCS will be significant.
These acquisitions, when completed, will result in a doubling of NCS's
annual revenues. Its customer base will triple. The company will operate
one of the most sophisticated Internet-based truck routing and scheduling
systems in the world. And the company will hold the Canadian patents for
the only proven organic waste recovery and recycling system in the world.
The management of the companies that are to be purchased offers a broad
base of experience, a focus on customer service, an obsession with quality
and a commitment to future growth.
"The successful conclusion of these transactions will bring National
Challenge Systems to the next level," said company president and chief
executive officer, Floyd Wandler. "We will achieve critical mass in our
ability to install and service organic waste recovery systems. We will now
be positioned as the best, in fact, the only proven solution to a huge
problem that is currently being faced by high-volume producers of organic
waste in Canada."
In a related development, NCS is in final negotiations with ORTI
International, the company that holds the U.S. patents for the organic
resource recovery system and the direct land application system. These
negotiations are with regard to the purchase by NCS of ORTI International's
rights to the ORRS and land application patents for the rest of the world.
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