The leading environmental services company, Vertex Energy Inc (NASDAQ:VTNR), announced that it sold its Nevada re-refinery facility for $35 million. As per the reports, Vertex immediately used $14 million of this sum to carry out a few necessary post sale activities.
The senior management team of Vertex Energy is delighted to announce this news and hopes that it will benefit the company in the long run. According to Benjamin P. Cowart, CEO & Chairman, Vertex Energy, there are a host of advantages of this transaction, such as operational efficiency and strengthening of the balance sheet.
Based on the recently filed 3Q2015 results and Form 10-Q filing, Vertex Energy management found out that the average carrying cost of this Nevada re-refinery facility was around $1.5 million per quarter. Now with the sale of this facility, this cost will be written off without any external arrangement. At the end of 3Q2015, Vertex had over $4 million in the form of cash and cash equivalents, after this sale transaction, this amount has risen to $10 million. The company has already settled its term loan worth $16 million with the help of the sales proceeds.
In Cowart’s opinion, this transaction will weaken company’s presence in the Western United States; however, it will allow Vertex Energy to improve logistic cost. Moreover, this deal will improve company’s business strategy with the help of long-term off-take agreement for finished lubricants and base oil.
Vertex Energy Inc (NASDAQ:VTNR) wishes to use this cash to pay off long-term debt and make acquisitions that can help it expand in different parts of the world. At the end of 3Q2015, Vertex had about $23.2 million debt owed to Goldman Sachs, but now it has used $16 million from the proceeds of this sale to bring down that figure to $7 million. Going forward, it will try to write that off entirely to become a debt free entity.