Unisphere reports new contracts, moves forward on acquisitionUnisphere Waste Conversion has signed a one-year contract with Tri City Services, a major scrap tire collection and processing operation based in Guelph, Ontario. Unisphere will set up one of its mobile Columbus McKinnon shredders at Tri City Services to process radial truck tires into two-by-two-inch tire shred. This initial contract will generate approximately $1 million in revenues and includes an option to renew for a further twelve months.
Unisphere is actively pursuing other similar contracts in southern Ontario and has just commissioned an additional shredder at Chatham Rubber Manufacturing in Chatham, Ontario. This shredder will process passenger and light truck tires to meet the growing demand for tire-derived fuel (TDF) in New York and Michigan markets. The Ontario scrap tire market is currently processing less than 50% of the 14 million passenger tire equivalents (PTEs) generated annually in Ontario. Unisphere is in discussions with Ontario tire suppliers and other TDF users in New York and Michigan in order to increase its supply to this growing energy market.
Last week, the company announced another contract it has received from the Ontario Ministry of Environment to complete the cleanup of the Otterwood tire site in Otterville, Ontario. The Phase II contract, valued at approximately $250,000, follows Phase I, a $1-million remediation contract awarded to Unisphere by the Ministry in August 2003; the work was completed in March 2004. Phase II of the cleanup will begin immediately and is scheduled to be completed in 90 days.
In other activities, Unisphere reports that it has agreed to acquire all of the outstanding shares of Wellington Polymer Technology from the firm's 21 shareholders for $1.7 million in cash plus shares in Unisphere valued at $1.75 million. The cash paid and shares issued to the Wellington shareholders will be based on their current share ownership of Wellington. Once the acquisition is finalized, Wellington president Daniel Warrener will enter into a three-year employment agreement with Unisphere.
From January to April 2004, Wellington's manufacturing facilities in Chatham, Ontario were shut down in order to incorporate a double extrusion process to increase production capacity and enhance quality. These improvements have been completed and Wellington has been ramping up production since May. In June, the company recorded sales revenue of approximately $160,000 and July sales are expected to be approximately $225,000. Once the acquisition has been finalized, Wellington plans to add a second production line to its Chatham facility.
Once completed, the acquisition of Wellington will strengthen Unisphere's position in the remediation and conversion of used tires into manufactured products such as roofing materials, shoe soles, commercial and industrial mat and floor tiles, crumb rubber and tire-derived fuel.