May 04, 1999 06:15
SGI International Acquires ENCOAL Corporation and LFC Assets LA JOLLA, Calif., May 4 /PRNewswire/ -- SGI International (OTC Bulletin Board: SGII) announced today the execution of an agreement to purchase the following: AEI Resources' and its subsidiary's 50% interests in the Liquids From Coal (LFC) technology; the ENCOAL Corporation, which owns the ENCOAL LFC demonstration plant; certain existing permits necessary to build an LFC plant near Gillette, Wyoming; and, all other tangible and intangible LFC assets.
The purchase price consists of the elimination of a $1.13 million invoice to an affiliate of AEI, a $2 million promissory note payable in five years and the assumption of obligations attendant to ownership of the ENCOAL demonstration plant. The acquisition also calls for a release of all claims between the parties and finalizes the dissolution of TEK-KOL. This agreement allows SGI the ability to move forward to secure financing for capital improvements and complete supply and product agreements, which represent some of the conditions for closing. The capital improvements are expected to increase the plant's production capacity and model commercial process enhancements.
SGI's objective is to put the ENCOAL plant into operation by mid-2000. The ENCOAL plant was constructed by Shell Mining Company and the Department of Energy, placed in operation in 1992 and operated successfully for five years at a total cost for construction and operation of $92 million. The plant converts low-rank coal to coal liquids and an environmentally responsible upgraded coal that satisfies most, if not all, of the Clean Air Act Amendments, which take effect on the first day of the new century. SGI forecasts, based on known operating cost factors, product pricing criteria and Section 29© alternative fuels tax credits, that the ENCOAL plant can produce positive cash flow. These tax credits are available through the year 2007. SGI believes plant operation will also provide the test materials required to secure commercial contracts.
Joseph A. Savoca, SGI Chairman/CEO stated: “SGI is pleased to have the opportunity to consolidate the ownership of all LFC interests and assets. We can finally overcome the significant handicap of having owned 50% of the LFC technology without having had any ownership interest in the demonstration plant. For the first time SGI will be in total control of the LFC technology and the ENCOAL plant, and, to that end, we view our ownership and operation of the ENCOAL plant as an important step toward the commercialization of the LFC technology.”
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. Its corporate headquarters are in La Jolla, California.
(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/
/Web site: sgiinternational.com
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05/04/99 07:37 AM EDT
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