CHARLESTON, S.C. (Nov. 15, 2000)—Santee River Rubber Co. L.L.C., the 90,000-sq.-ft., state-of-the-art crumb rubber processing facility near Charleston, is in limbo.
Environmental Processing Services Inc. (EPS), the Garden City, N.Y.-based owner and operator of the site, has closed the plant after a promising trial run to obtain further financing in an undisclosed amount. But executives of Ridgewood Power L.L.C., the Ridgewood, N.J.-based equity partner in the project, think EPS fouled up the economics of the plant and want to take it over themselves.
Using EPS´ proprietary cryogenic grinding system, the Santee River plant underwent a prolonged production test run in July and August which demonstrated that the facility could produce high-quality, fine-mesh crumb rubber consistently, according to James Randall, chief executive officer of EPS. But construction and ramp-up costs were higher than expected.
"It was a good-news, bad-news situation," Mr. Randall said. "The good news was that the technology worked as well as we thought it would. The bad news was that the ramp-up budget was depleted."
The Santee River facility is set up to manufacture 150 million pounds of 60-to 200-mesh crumb annually, and the trial run produced "several million pounds" of crumb that EPS sold promptly to customers, according to Mr. Randall. As for the rest of the fundraising, EPS is conducting that under Chapter 11 proceedings filed Oct. 26 in federal bankruptcy court in Columbia, S.C.
"Our equity partner doesn´t seem particularly interested in sharing the problem, but in stealing the company," Mr. Randall said. "They´ve charged all sorts of things, which is why we´ve had to reorganize through the bankruptcy court." Ridgewood Power reneged on a promise of funding it made before the current problems, he added.
EPS "completely mismanaged the construction and operation of the plant," according to Martin Quinn, executive vice president and CEO of Ridgewood Power.
"We feel the whole concept of recycling tires and providing quality crumb rubber is a viable task, and we feel the economics of the situation will give investors a nice return on their investment," Mr. Quinn said. "We feel we could revive the project with better management and a capital infusion."
If it gains control of the Santee River plant, Ridgewood Power could either select new management or manage the project in-house, according to Quinn. "We operate and manage 50 percent of the projects we have an equity interest in," he said.
But the final disposition of the project is up to the bondholders, he added. "If the assets were put on sale, we would bid on them," he said. "It will more likely than not be an auction process."
EPS, meanwhile, is channeling all its activities toward saving its ownership of Santee River and resuming operations there. It had plans to start building another crumb rubber plant near Nashville, but has put that project on the back burner while it proceeds with reorganization at Santee River, Mr. Randall said.
The first hearing in the Chapter 11 case—a meeting with creditors—is scheduled for Dec. 21 in Charleston, he added.
At least one speaker at Rubber Recycling 2000—the conference co-sponsored by the Scrap Tire Management Council and the Rubber Association of Canada and held in Mississauga, Ont. Oct. 11-13—expressed the hope that the Santee River operation will again be open for business.
"Santee River sold very good-quality rubber," said James M. Nagy, project chemist in light truck tire development for Continental General Tire Inc. "I hope somebody buys that plant and keeps it open."