SGI International Comments on its Business
LA JOLLA, Calif., April 9 /PRNewswire/ -- The following statement is being issued by SGI International (OTC Bulletin Board: SGII):
In response to questions from a number of shareholders and brokers regarding the status of the Company, Joseph A. Savoca, SGI Chairman/CEO stated: "In order to strengthen the Company's financial position, SGI is in discussions with a number of investors and potential strategic partners to obtain approximately $12 million, in whole or in part, in exchange for long-term debt and convertible securities. The convertible securities have no conversion rights for five years, and may be redeemed by the Company prior to that time. SGI intends to use these funds to pay its long-term convertible debentures and notes of approximately $4 million, to prevent further conversions and consequent dilution, and supply the Company with required working capital for a period in excess of one year."
SGI's business is developing proprietary technology to upgrade low-value carbon feedstocks (primarily low rank coals, heavy crude oil and petroleum refinery resid) into valuable carbon fuels and products, and into valuable specialty chemicals. SGI has developed and patented two technologies that accomplish that objective: the Liquids from Coal (LFC) process and the Opti-Crude Enhancement Technology (OCET) process. The LFC process converts and upgrades low-rank coal into a higher Btu fuel that produces less NOx, SOx, and CO2 than the feedstock coal and simultaneously produces low-temperature coal tar liquids, which contain valuable chemicals. The Department of Energy (DOE), in an August 1997 report, recognized that the LFC process was one of two technologies that, as part of the United States Clean Coal Technology Program, it deemed to be successful. The OCET process is designed to deasphalt and demetalize crude oil as well as petroleum refinery resid.
On January 14, 1999, SGI entered into a joint venture with a subsidiary of Mitsubishi Corporation to jointly commercialize and market the LFC technology. Mitsubishi is providing the Company with $500,000 a year in support of the joint venture. This joint venture takes place after the expenditure, principally by SGI, Shell and the DOE of more than $150,000,000 to develop the technology. In the Company's opinion, the LFC Technology has matured to be the "right technology" at the "right time," particularly as phase II of the Clean Air Act Amendments (CAAA) become effective on January 1, 2000. We believe that this "super-compliance," upgraded clean coal product can greatly assist or even assure compliance with the CAAA and have begun marketing this product to electric utilities burning coal to produce electricity.
The company is pursuing critical business objectives in 1999 to bring the company's technologies to the marketplace. Those objectives include the following:
-- Purchase from AEI Resources (AEI) the LFC demonstration plant located
in Gillette, Wyoming, which originally cost $92,000,000. SGI has
submitted an offer to AEI and a purchase agreement, which we expect to
execute shortly. SGI intends to purchase the demonstration plant and
put it into profitable operation by early 2000. The pro forma
financial statement for the plant indicates that SGI should be able to
earn several million dollars per year from the plant, in cash and in
Section 29(c) tax credits.
-- Finalize agreements to sell all upgraded coal to several electric
utilities and to sell all coal liquids from the demonstration plant to
chemical companies.
-- Finance and construct two proposed commercial LFC projects in the
Powder River Basin in Wyoming. Either of these projects will provide
significant revenues to SGI.
-- During 1998, our laboratory built the OCET Process Demonstration Unit
that has provided valuable factual data showing that the OCET Process
has commercial applications. As a result of this work, SGI is in
discussions with two large engineering and construction companies to
use the OCET process as an improvement on existing solvent
deasphalting plants.
-- During 1998 our laboratory invented a novel "level sensor" that the
Company believes is superior to previous capacitive level sensors.
SGI applied for a patent on January 21, 1999, and has commenced
discussions with several instrument manufacturers to license and earn
revenues from the sensor.
Based on the status of present business activities, SGI Management believes that the Company can, within the next six months, generate income from the commercialization of one or more of its products.
SGI located in La Jolla, California is a high technology company focused on generating profits from proprietary technologies and creating strategic alliances that assist in the development of its projects and result in the purchase of products from those projects.
(This news release contains forward-looking statements. Actual results could vary from those expected due to a variety of risk factors, including, but not limited to, the uncertainty of successful completion of contemplated or proposed business transactions.)
SOURCE SGI International
/CONTACT: Nancy C. Propp of SGI International, 619-551-1090/
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