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U S. Liquids' Business Units Sold
Houston, TX— U S Liquids Inc., a provider of liquid waste management services, provided an update on business unit sales and announced preliminary results for the quarter ended September 30, 2003.
Since the quarter ended June 30, 2003, the Company has sold business units or assets in the following transactions:
As previously announced, on July 31, 2003 the company sold its Oilfield Waste Division, its Beverage Division and its Romic Environmental Technologies business to ERP Environmental Services, Inc. (“ERP Environmental”). At the closing, the company received $68 million in sales proceeds from ERP Environmental. These proceeds were used to reduce outstanding indebtedness under the company’s credit facility, pay transaction expenses, fund employee severance obligations, and for other matters required by the purchase agreement. In accordance with the terms of the purchase agreement, the purchase price was subsequently reduced by $3.5 million based upon the final determination of the closing date net worth of the businesses sold. ERP Environmental also paid the company $2 million for transition services provided by the company.
From late September through early November 2003, the company completed several additional divestitures generating total proceeds of $7 million. Commercial Division businesses sold include Waste Stream Environmental, Northern A-1, Gateway Terminal Services, and National Solvent Exchange. The proceeds from these transactions were used to reduce the outstanding indebtedness under the company’s credit facility and pay transaction expenses.
As a result of these sales, the company has reduced borrowings under its credit facility by $66.4 million since July 31, 2003 such that the outstanding balance is $13.5 million with additional letters of credit outstanding of $6.7 million. The company has also modified the financial covenants contained in its credit facility and extended the maturity date to December 1, 2003. The company is engaged in discussions with its lenders to further extend the maturity date of the credit facility in order to provide for the company’s liquidity needs. No assurances can be given that the company will be able to extend the credit facility beyond December 1, 2003. Currently, the company is in compliance with the financial covenants contained in the facility. However, the company is restricted from making any additional borrowings without the approval of its lenders. A default under the company’s credit facility could result in the maturity of substantially all of the company’s indebtedness being accelerated.
The company is pursuing the sale of additional operating units and assets in order to reduce its indebtedness.