Houston, Texas-based Vertex Energy, Inc. announced the sale of its used oil re-refinery located in Churchill County, Nev., U.S.A.., to Clean Harbors, Inc. for USD 35 million. Approximately USD 14 million from the sale was used at closing to purchase the facility and equipment previously leased by Vertex Energy in order to facilitate such sale.
“This transaction benefits Vertex Energy in a variety of ways, not the least of which is by strengthening our balance sheet,” said Benjamin P. Cowart, Chairman and CEO of Vertex Energy. By selling the facility, Cowart said Vertex Energy has eliminated an average carrying cost for the facility of USD 1.5 million per quarter. “We eliminate those costs with this transaction,” he said.
“At the end of the third quarter of 2015, our cash and cash equivalents were over USD 4 million. This sale and related transactions will bring that cash position to more than USD 10 million.”
“While the sale of our re-refinery in Nevada will lessen our footprint in the western U.S., the swap agreement and base oil agreements that were entered into as part of the sale should allow us to improve logistic costs and provide us with a long-term off-take agreement for base oil and finished lubricants to support our business strategy going forward.”
Cowart said that part of the proceeds from the sale of the Nevada re-refinery also was used to reduce the company’s long-term debt. “As of the end of the third quarter, the amount of our term debt owed to Goldman Sachs stood at USD 23.2 million. We have used USD 16 million of the funds from the Nevada sale to pay down and service that debt, lowering the amount owed to approximately USD 7 million today and our total long-term debt to approximately USD 14 million.”
He said Vertex Energy is also looking to acquire companies to expand street collections of used oil to reduce its reliance on third-party purchases. He said Vertex Energy expects margins to improve by moving awar from third-party purchases.
Clean Harbors’ Chief Operating Officer Eric W. Gerstenberg said its purchase of the Nevada facility aligns with the company’s plans to boost its re-refining presence in the West Coast.
“This plant provides an opportunity to scale our blended operations in the Western U.S. where we currently have no capability. We are confident that the facility will complement our existing re-refining network through transportation efficiencies, additional storage and processing capabilities,” he said.