Nov 18 2009
General Environmental Management, Inc. (GEM) has announced that it has acquired Santa Clara Waste Water (SCWW), a provider of complete environmental services, with a strong focus on the treatment of waste water.
With a vision to become the leading non-hazardous waste water treatment company in the United States, Tim Koziol and Doug Edwards , chief executives of GEM and SCCW, respectively, have resolved to work closely with the management teams of both companies in the coming period.
GEM’s rationale behind the acquisition includes the leadership status of SCWW in the wastewater management arena and the management capabilities that were expected to come with the acquisition. Being one of the leading 100 private non-hazardous waste water treatment companies in the United States, SCWW has a track record for treating over 2 billion gallons of waste water since its inception.
The strategic placement of the company’s facility in Santa Clarita Valley and the unique 12.7 mile pipeline stretching from its facility to the water recycling center in the city of Oxnard, also served as key motivators for the acquisition of SCWW by GEM. These factors have awarded GEM with a strong platform for expanding its local as well as countrywide presence. GEM’s goals are seen to be complementary with the goals of SCWW.
SCWW CEO Doug Edwards is confident that the acquisition will make the combined business achieve the status of the leading national waste water treatment company in light of the large size of the US industry and growing demand for water treatment. Edwards opined that through this acquisition, SCWW is well positioned to leverage its knowledge, experience and assets along with its unique pipeline services to its best advantage.
Given SCWW’s high profitability business model, GEM’s Chief Financial Officer, explained that the takeover was valued at three times the company’s trailing EBITDA, in addition to assuming its long-term debt. The acquisition is being financed by the issuance of promissory notes (six units at 6.5% annual interest rate) and warrants for raising $9,003,000 and purchasing 425,000 SCWW shares, respectively. More deal metrics are available in the 8-K filed by GEM.
While this acquisition is regarded accretive to GEM’s business, the company has decided to divest its field service business activities and focus more strongly on the waste water treatment business. For about a month, GEM has been exploring strategic alternatives for its field services business. The company is currently liaising with a potential buyer and hopes to close the transaction shortly. GEM plans to use the proceeds from the divestment to finance a major part of its existing debt.
Source: www.GeneralEnvironmental.com