Probex Reports to Annual Meeting That Project Financing for Wellsville Plant, Discussions Toward JV Alliance Agreement On European Facilities Advancing
DALLAS--Feb. 28, 2001--Probex Corp. (AMEX:PRB), an energy technology company, today said that it is continuing to make progress toward obtaining project financing for its first used oil reprocessing plant to be built at Wellsville, Ohio. Commitments are expected to be lined up near the end of March, with completion of the over $100 million financing expected in the second calendar quarter of this year and initiation of construction immediately following the closing. The financing is being structured and arranged by the Company's exclusive financial advisor Credit Suisse First Boston.Shareholders were also told that Probex is continuing to advance discussions toward a joint venture alliance agreement with a major European conglomerate for plants to be built in Europe. Additionally, the Company said it is continuing to evaluate potential acquisitions of regional used oil collection companies in areas where it plans to build its first three domestic facilities, with the possibility that one or more such acquisitions could be accomplished this year.
Charles M. Rampacek, Probex Chairman, CEO and President, noted that the Company has met a very enthusiastic response to the Wellsville project from prospective lenders.
Wellsville Process Design Nears Completion, Costs In Line
Rampacek added that the Company is making excellent progress toward achieving its major objectives, with the primary focus on activities related to construction of Wellsville. "We are nearing completion of the process design for Wellsville with Bechtel Corp., our engineering, procurement and construction services partner. And while we are still finalizing our numbers, we expect cost estimates for Wellsville will fall close to our original estimates," he said.
"Integral to the financing for Wellsville, we have secured initial commitments from manufacturers of blended lube oil products for approximately 80% of the lube base oil products from our Wellsville plant. We consider this an ideal commitment level allowing market flexibility. Our ability to obtain these initial commitments indicates the strong market we believe is available for our high quality lube base oil product, which is capable of meeting the new motor oil standards," he continued. Rampacek also noted that the Company is obtaining off-take commitments for its fuel oil and asphalt products, which have good value in the market. The Company anticipates executing all of the off-take contracts near the end of this quarter.
Also critical to the construction of the Wellsville facility are various permits. Probex expects to receive the key air permit from the Ohio Environmental Protection Agency this quarter, with other permits necessary for construction to follow quickly thereafter.
Feedstock Supplies Firming
Rampacek explained that the Company's second area of activity relates to ensuring feedstock for its domestic facilities. "In the near term, we are driving toward securing 100% of the used oil feedstock required for the Wellsville facility. We expect to accomplish this by the end of this quarter through a combination of Company-owned supplies and supply contracts. Probex currently collects approximately 60% of the used oil required for Wellsville and we expect to expand this over time," he said.
Strategically, Probex's goal is to build a national collection system capable of supplying 100% of the used oil feedstock expected to be required for the five U.S. reprocessing facilities targeted for construction by 2006. This growth is expected to come from targeted market expansion of existing collectors, from joint ventures and from acquisitions. In that regard, Probex is continuing to aggressively evaluate the potential acquisition of used oil collection companies located in areas where it plans to build plants, with the possibility that it could accomplish one or more acquisitions this year.
Probex is continuing to evaluate sites for potential future reprocessing facilities in the Northeast and along the Gulf Coast. These, and other future Probex facilities are anticipated to be constructed near areas where the Company has or expects to establish major collection operations, significantly reducing transportation costs and improving potential margins.
European JV Agreement Near
"Another major area of focus for the Company," Rampacek told the meeting, "is completion of a joint venture alliance agreement with a multi-national European conglomerate for development of European plants utilizing our patented ProTerra(TM) technology. Assuming completion of that agreement, we expect that our first European facility will begin construction approximately 9-12 months after commencement of construction of Wellsville and be ready for operational start-up in the summer of 2003.
"The market for high-quality reprocessed lubricating base oils in Europe appears to be at least as promising as the one in the U.S. Driven by growing environmental concerns and mounting disposal problems, there are new regulations in Europe which will impose tax penalties on used oil which is burned, rather than reprocessed. In addition, there is legislation under considerations which could require that all motor oil sold in Europe contain up to 25% reprocessed base oils. Even without this legislation, the base oil Probex expects to produce meets the current European base oil specifications. Overall, our goal is to construct and put in operation a number of international JV facilities during the next several years," Rampacek said.
Outlook
Over the next few months, Probex expects to finalize the tasks necessary to initiate construction of the Wellsville reprocessing facility. The critical goals related to Wellsville, all of which are near completion, are to:
| -- | Execute the off-take contracts for the lube oil products. |
| -- | Secure 100% of the used oil feedstock supply. |
| -- | Receive the necessary permits for construction. |
| -- | Complete site clearing. |
| -- | Close on project financing. |
| -- | Initiate construction. |
Other near-term goals include:
-- Execute the joint venture agreement with the European
conglomerate.
-- Continue targeted market expansion of the used oil collection
business, and advance discussions toward the acquisition of
additional used oil collection companies.
-- Advance work toward selection of planned Northeast and Gulf
Coast plant sites.
Other Meeting Notes
In other matters, Dr. Bob G. Gower was newly elected to the Company's board of directors. He is the retired President and CEO of Lyondell Petrochemical Company. Dr. Gower became the President of Lyondell Petrochemical Company when it was formed in April 1985 and was elected Chief Executive Officer in October 1988 and Chairman of the Board in August 1994. From 1984 to 1985 he served as Senior Vice President for Atlantic Richfield Company, responsible for planning and advanced technology for the company. From 1979 to 1984 he was Senior Vice President of ARCO Chemical Company and prior to that had various executive, sales, research and engineering assignments with Sinclair and with ARCO after the merger of the two companies. He is a member of the Board of Directors of Kirby Corporation, Omnova Solutions Inc., and CheMatch.com.
Annual Meeting Replay
Probex broadcast the meeting live to securities analysts and any other interested persons via teleconference and Web cast. A replay of the meeting will be available by telephone for 90 days at 800/345-5169 toll free in the United States or 402/220-1442 for international callers and will be posted on www.vcall.com for 90 days and on the Company's Web site at www.probex.com.
About Probex
Probex is a Dallas-based energy technology company that has developed and patented its environmentally beneficial ProTerra(TM) lubricating oil technology for reprocessing, purifying and upgrading used motor oils. ProTerra has demonstrated unparalleled advantages in the highly economic creation of premium quality base oils capable of meeting new motor oil standards without creation of waste by-products. The goal of Probex is to become the world leader in reprocessing used lubricating oils into premium quality base lube oils through timely commercialization of ProTerra. For more information about Probex, visit the company's Web site at: www.probex.com.
Certain statements contained herein may be considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These statements are based upon the belief of the Company's management, as well as assumptions made beyond information currently available to the Company's management, and may be, but not necessarily are, identified by such words as expect, plan, anticipate, target, and goal. Because such "forward-looking statements" are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from the Company's expectations include financial performance, conditions in the lubricating oil industry, the Company's ability to obtain financing for its anticipated acquisitions and plant development, market acceptance of the Company's products and technologies, changes in local, national or global economic conditions, and similar variables. Also refer to the cautionary statements contained in the most recent Forms 10-KSB and 10-QSB which may be obtained under "Investor Relations-SEC Filings" on the Company's web site or by writing or calling the Company at One Galleria Tower, 13355 Noel Rd., Suite 1200, Dallas, TX 75240; 972/788-4772.