DALLAS-Waste Recovery Inc. (WRI) has signed a letter of intent to buy the assets and business of U.S. Tire Recycling L.P. of Concord, N.C. Under the agreement, U.S. Tire's owners, a group of investors, will receive newly issued shares of WRI along with convertible subordinated debt. The purchase is valued at about $5 million.
The purchase, which is subject to due diligences and development of a definitive purchase agreement, is expected to be completed in July, the company said.
U.S. Tire operates a tire monofill and collects, disposes and does some recycling of about 6 million scrap tires annually from North Carolina, South Carolina and Virginia and parts of Georgia and Tennessee.
WRI is a major processor of tire-derived fuel with plants in Georgia, Illinois, Texas, Oregon and Pennsylvania.
WRI President and CEO Thomas Earnshaw said U.S. Tire and WRI's Atlanta operation are far enough apart that they have never competed, so the acquisition will give WRI a larger service area.
The buyout comes on the heels of a tumultuous year in which WRI opened two TDF plants in Illinois, renovated an acquired plant in Philadelphia, and doubled its annual capacity to 40 million tires. But as a result, the Dallas-based firm suffered financial losses during 1995 and early 1996.
However, Mr. Earnshaw expects a turnaround and believes U.S. Tire will not adversely affect earnings. ``We're buying something that has history. We're not going to change (the operations) right away,'' he said. ``. . . We're acquiring existing markets and combining their earnings with ours.''