GreenMan Technologies Inc. has entered into agreements with two separate parties for the purchase of all its Georgia scrap tire operating assets.
GreenMan had previously implemented an initiative to dispose of all its Georgia operating assets and wrote down these assets to their estimated fair market value at Sept. 30, 2005. The result: GreenMan recorded an estimated non-cash loss on disposal of approximately $3.4 million.
According to Chuck Coppa, GreenMan's chief financial officer, the move was necessary "due to the magnitude of the operating losses incurred by our Georgia subsidiary."
The aggregate losses were approximately $8.3 million, plus approximately $746,000 of the estimated net loss of $1.3 million for the quarter ended Dec. 31, 2005. The company does not anticipate recording any additional loss on the disposal of these assets.
"We have entered into an agreement with Tires Into Recycled Energy and Supplies Inc. ("TIRES") in which we have sold and assigned to TIRES certain truck tire processing equipment located at our Georgia facility; certain rights and interests in our contracts with suppliers of scrap truck tires; and certain intangible assets," says Coppa.
"We received $155,000 in cash proceeds from the sale, and TIRES agreed to terminate several material supply and equipment lease agreements previously executed between the parties in addition to terminating a December 2005 letter of intent between GreenMan and TIRES containing an exclusive option to acquire certain operating assets of TIRES.
"We have also entered into an agreement with MTR of Georgia Inc. in which we have sold and assigned to MTR certain passenger tire processing equipment located at our Georgia facility; certain rights and interests in our contracts with suppliers of scrap passenger tires; and certain intangible assets.
"We received $250,000 in cash proceeds from the sale, and MTR has agreed to assume financial responsibility for disposing of all scrap tires and scrap tire processing residual at the Georgia facility as of the close," he adds.
As part of the agreements, GreenMan will not compete in the business of providing whole tire waste disposal services or selling crumb rubber material (except to existing GreenMan customers) within certain southeastern states for a period of three years.
By its own count, GreenMan recycles more than 20 million scrap tires per year in the United States.
