HAWTHORNE, Fla.-ECO2 Inc., a manufacturer of tire recycling systems, has signed a letter of intent to purchase Wastemasters Inc. of Waldron, Mich., which operates three landfills. ECO2 said the Wastemasters acquisition is an outgrowth of its strategy to become an integrated waste processor rather than just an equipment supplier to the tire recycling industry.
But the acquisition also enables the company to introduce its patented tire pyrolysis technology countrywide by providing landfill sites on which to install its processing plants, according to ECO2 President Charles Ledford.
The acquisition is a reversal of a prior agreement in which Wastemasters intended to buy two pyrolysis plants from ECO2.
ECO2, which has been trying to market its pyrolysis system for years, decided it was more lucrative to own the sites and establish some plants than to sell a couple of systems to Wastemasters, Mr. Ledford said.
He admitted despite negotiating with about 25 prospective buyers of its tire recycling system, ECO2 has failed to finalize a sale. ``Nobody wants to be first,'' he said.
Pyrolysis-which involves heating tires in an oxygenless chamber to break them down into by-products including oil, gas and carbon char-has been around for years, but has seen little commercial-scale development.
In fact, the economic viability of the process is a matter of dispute within the tire-recycling industry.
Since 1993, ECO2 has operated a tire pyrolysis facility in Hawthorne, where it also produces crumb rubber, from which it makes such products as rubber doormats, vibration pads and mulch.
The Wastemasters acquisition will provide ECO2 with the sites, a supply of scrap tires and experienced waste management personnel for the installation and operation of its plants, ECO2 said.
Under the Aug. 21 purchase agreement, ECO2 will acquire all properties and projects owned by Wastemasters and its affiliates for cash and restricted convertible preferred stock. The properties include the Rye Creek landfill in Kirksville, Mo.; a management contract for Steel Brothers landfill in Lafayette, Ga.; the Appleton, S.C. landfill; and a transfer station in Baltimore.
ECO2 also will gain contracts to buy a Washington, D.C., transfer station, a compost plant and transfer station in Baltimore, and a transfer station in Philadelphia.
ECO2 will pay $1 million cash under the agreement-$200,000 at closing with the remaining paid with 10 percent of the profits of the acquired assets over the next three years-and will issue 250,000 shares to Wastemasters, worth another $1.5 million.