KTI Inc. plans to expand its plastics recycling business, and possibly extend it into plastics processing, as part of its acquisition of FCR Inc.
KTI signed a letter of intent last week to buy FCR for a total of nearly $100 million in cash, stock and future payments. Plastics reprocessing constitutes a small part of both companies, which also operate materials recovery facilities and waste-to-energy incinerators. But KTI now intends to become a larger player in the plastics recycling industry.
``We're moving toward being a vertically integrated recycler and will expand substantially on the plastics side by adding value to the plastic,'' Martin Sergi, KTI president, said by telephone.
``Right now the process stops at pellets. In the future we want to take it from recycling and baling to remanufacturing.'' He declined to state what end markets the company is considering.
The FCR Plastics division recycles post-consumer high density polyethylene into pellets at three plants, in Reidsville, Rockingham and Hamlet, N.C. The firm has a capacity of nearly 50 million pounds and employs about 75. Last fall, FCR Inc. purchased the assets of Resource Recycling Inc. to create FCR Plastics.
Last year, KTI bought Manner Resins Inc. of Annapolis, Md. The trading and brokerage operation handles more than 40 million pounds of mainly post-industrial plastics a year and employs 12. The company brokers HDPE, low density PE, PET, polypropylene and polystyrene.
The purchase price includes $30 million in cash and as much as another $30 million in cash or KTI stock. It also includes 1.7 million shares of KTI stock, valued at about $20 on May 6, the day the deal was announced.
``This acquisition is for growth,'' Sergi said. ``It gives us a larger footprint in the industry and we are striving to be the preferred player for municipalities and waste haulers.''
KTI, a waste-to-energy and recycling company based in Guttenberg, N.J., has a history of buying firms operating in less-than-profitable industries and turning them around. Last November, it purchased bankrupt Prins Recycling Corp. Newark, N.J.-based Prins filed for bankruptcy after prices in the paper market collapsed.
FCR, a national waste processing firm based in Charlotte, N.C., operates 26 plants in 12 states and employs about 700. It is organized around three business units: MRFs, cellulose insulation manufacturing and plastics recycling plants.
FCR had sales of about $40 million last year but is running at a rate of nearly $100 million this year. The company collects plastic, newspaper, aluminum, steel and glass.
Last year, KTI had sales of about $100 million, but has a current run rate of $200 million.
