SOUTHFIELD, Mich.--(BUSINESS WIRE)--Detrex Corporation (DTRX.PK) announced that effective today it closed on a contract to transfer environmental liabilities and obligations associated with 20 properties to Environmental Liability Transfer, Inc. (“ELT”) for a payment of approximately $13.7 million. The contract also transferred title to four properties owned by Detrex. In conjunction with the contract, the Company also purchased a pollution legal liability policy (PLL) which provides coverage for third party liability. This transaction is explained in greater detail under Note 15 – Subsequent Event contained in the Detrex 2012 Annual Report on page 28.
This transaction marks a significant milestone in the Company’s pursuit of solutions to its environmental legacy liabilities. These liabilities have long been a source of uncertainty and a significant financial drain on the Company. This transaction transfers to ELT all but $2.5 million of the recorded environmental reserve at December 3, 2012, which is the vast majority of the Company’s environmental liabilities, and the Company expects this transaction to result in improved predictability and sustainability of earnings and cash flow. The transaction was funded by cash on hand and debt of approximately $9 million. The Company expects that most of this debt will be repaid by the end of 2014 from a combination of free cash flow and federal income tax refunds against the substantial tax payments made for the Harvel Plastics, Inc. sale transaction.
President and CEO Tom Mark said, “This transaction provides us with a solid platform for pursuing growth at Elco and opens up possibilities for a number of opportunities to enhance shareholder value.”
About Detrex Corporation
Founded in 1925, Detrex Corporation through its subsidiary The Elco Corporation is a leading manufacturer of high performance specialty chemicals including additives for industrial petroleum products and high purity hydrochloric acid.
Forward Looking Statements
Statements included in this press release that are not historical in nature are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “1995 Act”). The words “believe,” “expect,” “anticipate,” “estimate,” “guidance,” “target” and similar expressions identify forward-looking statements. The Company cautions readers that forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected in the forward-looking statements. Certain risks and uncertainties are identified from time to time in the Company’s reports. Some factors that could cause results to differ materially from those projected in the forward-looking statements include: market conditions, environmental remediation costs, pension expense and funding requirements, liquidation value of assets, and marketability of real estate and the market value and future liquidity of Detrex stock. The Company claims the protection of the safe harbor for forward-looking statements contained in the 1995 Act.