BOSTON, Oct. 19, 2010 (GLOBE NEWSWIRE) -- Converted Organics Inc. (Nasdaq:COIN) today announced that it has completed a series of transactions that have eliminated a total of $19.3 million in debt, $2.3 million in liabilities and approximately $22.0 million in future interest and lease payments related to the Company's manufacturing Facility in Woodbridge, NJ, while adding $600,000 in cash to the Company's balance sheet.
"The completion of these transactions marks a significant milestone for Converted Organics and positions the Company to execute on its longer-term strategic initiatives, including pursuing the TerraSphere acquisition, the further development of our industrial wastewater business and the growth of our profitable organic fertilizer business in California," said Edward J. Gildea, Chairman, President and CEO of Converted Organics. "By restructuring the debt and closing the Woodbridge, New Jersey production facility, we have dramatically improved our balance sheet while eliminating a significant operational and financial burden to the Company. The restructuring coupled with the expense reduction measures we implemented earlier this year are expected to yield total cash savings of approximately $9 million per year, providing us with the operational and financial flexibility necessary to drive Converted Organics to its next phase of corporate development."
Converted Organics entered into an agreement with Oppenheimer Rochester National Municipals and Oppenheimer New Jersey Municipal Fund that settled and retired $17.5 million of municipal bonds in exchange for 17,500 shares of the Company's Series A Preferred Stock. These shares are restricted, and convertible to common stock at a rate of 1,842 common shares for each preferred share. Following the share exchange, the two Oppenheimer funds have the right to become the Company's largest shareholders upon conversion of the preferred stock. Additionally, pursuant to the terms of the Oppenheimer funds' debt-for-equity exchange, the Oppenheimer funds have authorized released back to the Company of $600K that the Company had paid to the indenture trustee in connection with its interest payment obligations under the municipal bonds.
Mr. Gildea added, "Oppenheimer Funds' conversion of the municipal bonds to equity demonstrates their belief in our ability to grow the Converted Organics business as we work to build a diversified, vertically-integrated portfolio of green assets. We are pleased to have Oppenheimer Funds join our shareholder base and look forward to their support as we build our business."
Additionally, the Company has received court approval of its settlement with American Capital Management under which the Company has discharged over $11mm of outstanding debt, claims and lease liabilities related to the Woodbridge Facility in exchange for Company common shares. Such shares of common stock will be issued by the Company pursuant to Section 3(a)(10) of the Securities Act of 1933.
"These agreements have no impact on the operations of our Gonzales, CA manufacturing facility, which will continue to profitably manufacture organic fertilizer products. We are currently exploring various strategic options that would allow for the continued manufacture of our granular fertilizer products, including potential private-label agreements," Mr. Gildea concluded.
Chardan Capital Markets, LLC acted as financial advisor to Converted Organics for purposes of these transactions.
About Converted Organics Inc.
Converted Organics Inc. (Nasdaq:COIN) ( www.convertedorganics.com ) is dedicated to producing high-quality, all-natural, organic soil amendment and fertilizer products through food waste recycling. The Company uses its proprietary High Temperature Liquid Composting (HTLC) system, a proven, state-of-the-art microbial digestion technology, to process various biodegradable food wastes into dry pellet and liquid concentrate organic fertilizers that help grow healthier food and improve environmental quality. Converted Organics sells and distributes its environmentally friendly fertilizer products in the retail, professional turf management, and agribusiness markets.
The Converted Organics Inc. logo is available at
About TerraSphere Systems, LLC
TerraSphere Systems () is dedicated to building highly efficient systems for growing fruits and vegetables in a controlled indoor environment. TerraSphere's clean technology helps to promote the sustainable consumption of natural resources by maximizing plant production and optimizing crop yields, while improving environmental footprints through the reduction of carbon emissions and fuel use associated with traditional crop production and distribution. TerraSphere's unique, environmentally and socially-responsible business model helps to facilitate job creation and diverse, community-based workforces. TerraSphere believes its technology can potentially revolutionize access to organic produce for both remote and urban communities, alleviate land management issues for agricultural producers, and ease hunger crises for the world's growing population.
This press release contains forward-looking statements that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. In some cases, you may identify forward-looking statements by words such as "may," "should," "plan," "intend," "potential," "continue," "believe," "expect," "predict," "anticipate" and "estimate," the negative of these words or other comparable words. Forward-looking statements include, the Company's ability to realize the expected cash savings from the restructuring,to pursue the TerraSphere acquisition, to develop its industrial wastewater business and to grow its liquid fertilizer business in California . These statements are only predictions. One should not place undue reliance on these forward-looking statements. The forward-looking statements are qualified by their terms and/or important factors, many of which are outside the Company's control, involve a number of risks, uncertainties and other factors that could cause actual results and events to differ materially from the statements made. The forward-looking statements are based on the Company's beliefs, assumptions and expectations of our future performance, taking into account information currently available to the Company. These beliefs, assumptions and expectations can change as a result of many possible events or factors, including those events and factors described in the "Risk Factors" section in the Company's most recently filed annual report on Form 10-K, as updated in the Company's quarterly reports on Form 10-Q filed since the annual report, not all of which are known to the Company. Neither the Company nor any other person assumes responsibility for the accuracy or completeness of these statements. The Company will update the information in this press release only to the extent required under applicable securities laws. If a change occurs, the Company's business, financial condition, liquidity and results of operations may vary materially from those expressed in the aforementioned forward-looking statements.
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