news release today:
Attention Business Editors:
National Challenge to acquire organic waste disposal companies in Canada's two largest markets and to expand its control of new organics systems
TSE Symbol: NLC
S.E.C. 12(g) 3-2 (b) No. 82-4222
VANCOUVER, BC, Sept. 21 /CNW/ - Today, National Challenge Systems, Inc.
(''NCS'') entered into a letter agreement with Organic Resource Management
Inc, a private Ontario corporation (''ORMI'') to acquire substantially all the
assets of ORMI for a total consideration of approximately $8.2 million. ORMI
is the largest vacuum truck fleet operator in Ontario dedicated to the
collection and recycling of fats, oils, greases and other non-hazardous
organic wastes and services over 3,000 food service sector customers.
NCS is also pleased to announce that it has entered into a separate
letter agreement with A&A Anderson Tank Service (Vancouver) Ltd. (''A&A''), a
private Vancouver-based company, to acquire substantially all of A&A's assets
and shares for a consideration of approximately $4 million. A&A has been
operating in the liquid waste industry in the Vancouver area since 1962 and is
the largest vacuum truck operator in the Lower Mainland servicing over 2,500
customers.
Both transactions are subject to (a) 30 days due diligence period, (b)
120 days to raise the necessary financing, and (c) all required regulatory
approvals. The selling shareholders of ORMI and/or A&A may elect to receive
either cash or a combination of cash and common shares in NCS. Should either
decide to receive partial consideration in shares, the number of NCS common
shares to be issued would be based upon a deemed price of $2.27 per share.
As well, NCS has entered into letters of intent with the owners of
Organic Resource Technologies Inc (''ORTI'') and with Organic Resource
Technologies International Inc (''ORTI International'') with regard to the
purchase of these companies. (ORMI and A&A have enjoyed close working
relationships with these companies for several years.) By purchasing ORTI and
ORTI International, NCS will control the global rights, all patents to the
ORRS system, and all patents to their organic waste recycling process. (The
ORRS units prepare organic waste for efficient transport in vacuum trucks and
enable the waste to be re-used as fertilizer, compost or a soil amendment by
means of ORTI's patented land application process. This 'system' offers a more
environmentally beneficial method of recycling organic waste as well as being
a less expensive alternative to sending the waste to a landfill.) NCS is not
aware of any other similar competing technology.
In North America, Europe, and elsewhere the annual volumes of organic
waste continue to increase due to population increases and lifestyle changes.
The primary generators of non-hazardous, organic waste are grocery stores,
hotels, restaurants, hospitals, universities, schools, and airports. In Canada
alone, there are over 70,000 establishments that are large organic waste
generators: 50,000 restaurants, 9,000 grocery stores, 9,000 hotels, and 2,500
other establishments. Preliminary estimates indicate that in the United States
there are over 500,000 establishments that are large organic waste generators:
300,000 restaurants, 100,000 grocery stores, 50,000 hotels, and 80,000 others.
The above acquisitions will give NCS a superior position in the
collection and recycling of non-hazardous organic waste due to (a) its
patented processes, (b) state-of the art, web-based truck service routing and
scheduling software, (c) its new critical mass, and (d) NCS's recently signed
exclusive ORRS marketing agreement with Canadian Waste Services. There are
already over 40 ORRS units installed in large Canadian grocery stores, some of
which have been operating for over 4 years.
NCS anticipates that it will be able to quickly expand its patented
organic waste management activities across Canada, into the United States, and
ultimately internationally.
NCS has grown to be the largest distributor of recycling, waste handling
and compacting equipment and systems in Canada and continues to see strong
growth in this area (a) by renting the ORRS units which are being marketed by
Canadian Waste Services and (b) by acquiring additional compactor fleets. NCS
is presently in discussions with several different parties, both in Canada as
well as the United States, regarding the sale/leaseback of their compactor
fleets.
NCS has been working with ORMI, ORTI and ORTI International for the past
two years developing, testing, and marketing the proven ORRS system. NCS has
come to recognize the enormous size and potential of the organic waste market
in North America and the fact that municipal, provincial, and national
regulators are seeking to find different disposal/recycling alternatives for
organic wastes and that several have initiated new rules and regulations. The
patented ORRS system is unique and addresses not only the regulators concerns
but has many operational benefits to the organic waste generators themselves.
The Company is very excited about the potential for this market and feels
that these acquisitions and the existing marketing agreement with Canadian
Waste Services will allow it to better penetrate the organic waste market and
to efficiently manage its expansion in North America and internationally.
Subject to regulatory approval, a finder's fee is payable to Cambridge
Capital Corp of 725,000 shares of NCS at a deemed price of $2.27 per share, of
which 225,000 shares are issuable immediately following regulatory approval
and 500,000 shares are issuable on closing the three acquisitions.
ON BEHALF OF THE BOARD,
(signed)
Floyd A. Wandler
-----------------
President & C.E.O.
-30-
For further information: Floyd A. Wandler, President & C.E.O.,
(604) 525-3555
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