GreenMan Technologies, Inc. (OTC BB:GMTI.OB) has entered into an agreement with Liberty Tire Services of Ohio, LLC, a subsidiary of Liberty Tire Services, LLC, to sell all assets of two tire-recycling subsidiaries, GreenMan Technologies of Minnesota, Inc. and GreenMan Technologies of Iowa, Inc.
GreenMan expects the cash proceeds from the transaction will exceed $26 million and, subject to shareholder approval and the satisfaction of customary closing conditions, expects the transaction to close during 4Q08.
GreenMan intends to use approximately $19 million of the proceeds to retire certain transaction related obligations including approximately $13 million due its primary secured lender, Laurus Master Fund, Ltd, under a June 2006 credit facility.
If the transaction is completed, GreenMan will have minimal long-term debt and more than $5 million of available cash as it moves forward with its two remaining subsidiaries, Welch Products, Inc. and its newest subsidiary announced last week, GreenMan Renewable Fuel and Alternative Energy, Inc., the company said.
Concurrent with the closing of this transaction, Liberty and GreenMan will enter a strategic multi-year feedstock supply agreement that will ensure an adequate supply of crumb rubber to support Welch’s growth objectives.
Lyle Jensen, GreenMan’s President and CEO, stated, "One of our primary objectives since completing the successful turnaround of GreenMan and our return to profitability has been to explore strategic avenues that would enable us to retire a significant amount of long-term debt accumulated from prior unprofitable ventures. The sale of our tire recycling business will not only provide us with adequate proceeds to completely repay Laurus, but will also provide us with substantial financial flexibility to invest in our future."
Jeff Kendall, CEO of Liberty Tire Recycling, said, "We are pleased to have the opportunity to acquire these two excellent operations whose people, products, and services will complement our other operations both in the upper Midwest and nationally."
Mr. Jensen further stated, "Our strategic acquisition of Welch Products, Inc. last October was a step toward realigning our business model around larger market opportunities that we saw in the development of recycled products and other green-based technologies. With the sale of our tire recycling business, GreenMan can now focus on expanding our Welch Products’ business model nationwide and look toward future strategic investment activities with the benefit of a healthy and unencumbered balance sheet."
Welch Products specializes in the design, product development, and manufacturing of environmentally responsible products using recycled materials made primarily from recycled rubber. The company’s patented products and processes currently include playground safety tiles, roadside anti-vegetation products, construction molds, and highway rubber spacer blocks. With its 2007 acquisition of Playtribe, Inc., Welch also created the National Playground Compliance Group ("NPCG"), which provides innovative playground & fitness equipment and turn-key installation.
GreenMan Renewable Fuel and Alternative Energy, Inc.’s primary objective is to pursue licenses, joint-ventures and long-term contracts focused on the commercialization of existing and late-stage development products and processes in green-based technologies including renewable fuels, alternative energy and recycled products.
About GreenMan Technologies
GreenMan Technologies pursues technological processes and unique marketing programs to transform recycled materials into renewable fuel, alternative energy, recycled feedstock, and innovative recycled products. Over twelve million tires are collected and recycled annually into tire-derived fuel, tire-derived aggregate, and crumb rubber feedstock for playground, athletic track and field, and road surfacing. Through GreenMan’s subsidiary, Welch Products, the company develops and markets branded products and services that provide schools and other political subdivisions viable solutions for safety, compliance, and accessibility. To learn more about all of the companies, visit the following websites: www.welchproducts.com; www.nssi-usa.com; www.playtribe.com.
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