GreenMan Completes Divestiture of Georgia Scrap Tire Business; Divestiture Will Positively Impact Future Cash Flow
March 06 2006 - 1:09PM
Business Wire
GreenMan Technologies, Inc. (AMEX: GRN), a leading recycler of over
20 million scrap tires per year in the United States, today
announced that it has entered into agreements with two separate
parties for the purchase of all Georgia scrap tire operating
assets. Chuck Coppa, GreenMan's Chief Financial Officer stated, "As
previously disclosed (See our January 6, 2006 release) due to the
magnitude of the operating losses incurred by our Georgia
subsidiary, we implemented an initiative to dispose of all Georgia
operating assets and wrote down these assets to their estimated
fair market value at September 30, 2005 recording an estimated
non-cash loss on disposal of approximately $3.4 million. The
aggregate losses (including the loss on disposal and approximately
$1.3 million of goodwill write-off), associated with the
discontinued operations of our Georgia subsidiary included in the
results for the fiscal year ended September 30, 2005 were
approximately $8.3 million and approximately $746,000 of the
estimated net loss of $1.3 million for the quarter ended December
31, 2005." (See our February 16, 2006 release). Mr. Coppa added,
"We today announce that we have entered into an agreement with
Tires Into Recycled Energy and Supplies, Inc. ("TIRES") in which we
have sold and assigned to TIRES (a) certain truck tire processing
equipment located at our Georgia facility; (b) certain rights and
interests in our contracts with suppliers of scrap truck tires; and
(c) certain intangible assets. 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. ("MTR") in
which we have sold and assigned to MTR (a) certain passenger tire
processing equipment located at our Georgia facility; (b) certain
rights and interests in our contracts with suppliers of scrap
passenger tires; and (c) 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. We agreed with TIRES and MTR not to 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. In
addition, both parties entered into a sublease agreement with us
with respect to part of the premises located in Georgia. We do not
anticipate recording any additional loss on the disposal of these
assets other than what was recorded at September 30, 2005. In
addition, on February 28, 2006, we amended our Georgia lease
agreement whereby we obtained the right to terminate the original
lease, which had a remaining term of approximately fifteen years,
by providing the landlord with six months notice. In the event of
such termination, we will be obligated to continue to pay rent
until the earlier to occur of (1) the sale by the landlord of the
premises; (2) the date on which a new tenant takes over; or (3)
three years from the date on which we vacate the property. "Safe
Harbor" Statement: Under the Private Securities Litigation Reform
Act With the exception of the historical information contained in
this news release, the matters described herein contain
'forward-looking' statements that involve risk and uncertainties
that may individually or collectively impact the matters herein
described, including but not limited to the possibility that we may
not realize the benefits expected from product acceptance,
economic, competitive, governmental, seasonal, management,
technological and/or other factors outside the control of the
Company, which are detailed from time to time in the Company's SEC
reports, including the quarterly report on Form 10-QSB for the
fiscal period ended June 30, 2005. The Company disclaims any intent
or obligation to update these "forward-looking" statements.
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