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[KTI, INC. LETTERHEAD]
NEWS RELEASE
FOR IMMEDIATE RELEASE
KTI TO ACQUIRE FCR, INC., A NATIONAL WASTE PROCESSING FIRM
WITH 26 PLANTS IN 14 STATES.
KEY BANK TO PROVIDE $150 MILLION ACQUISITION LINE.
GUTTENBERG, N.J. (MAY 6, 1998) -- KTI, Inc. (Nasdaq: KTIE) announced
today that it has signed a letter of intent to acquire all the outstanding
stock of FCR, Inc., a national waste processing firm based in Charlotte, N.C.
with 26 plants in 12 states organized around three business units: material
recovery facilities, cellulose insulation manufacturing and plastic recycling
plants. For the quarter ended March 31, 1998, FCR's three operating divisions
generated $17,632,558 in revenue, $3,237,869 in EBITDA and $917,678 in net
income. The company employs about 800 personnel. FCR's revenues are currently
running at an annual rate of $100 million.
The purchase price consists of (a) 1,714,285 shares of KTI stock; (b)
$30 million in cash; and (c) an earn-out provision of up to $30 million in
either cash or KTI stock with a floor price of $23 per share. The company and
FCR are currently preparing definitive documentation for the transaction. The
merger is contingent upon acquisition and delivery of such documentation,
necessary stockholder approvals and other customary legal requirements.
KTI also announced that Key Bank has agreed to provide an acquisition
line of credit for $150 million.
FCR's Recycling Division owns and/or operates 18 material recovery
facilities located in 10 states, which receive, sort, process and market
commingled materials under long-term contracts with municipalities and other
authorities. In 1998, the division is projected to process over 650,000 tons of
recyclables while KTI is expected to process some 500,000 tons in comparable
recyclables, excluding KTI's waste to energy and wood chip plants and marketing
divisions. During the past five years, FCR's recycling volume has had a
compounded annual growth rate of over 45%.
U.S. Fiber, Inc. FCR's Insulation Division, was created in May 1997
with the acquisition of cellulose insulation plants located in Rhonda, N.C. and
Tampa, Fl. During 1997, U.S. Fiber acquired additional plants located in
Delphos, Ohio and Portland, Ore. In January 1998, U.S. Fiber opened a newly
constructed manufacturing plant in Phoenix, Ariz. and currently has a plant
under construction in Dallas, Texas. These plants utilize waste paper as
feedstock and manufacture cellulose insulation material for sale to the
manufactured home industry and to insulation contractors.
FCR's third operating division is FCR Plastics, which was created in
September 1997 with the purchase of the assets of Resource Recycling, Inc., a
reprocessor of post consumer and post
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KTI, Inc.
industrial plastics in North Carolina. FCR Plastics has three plants processing
over 50 million pounds of recycled plastics a year. KTI currently operates a
plastics trading and brokerage operation, which is located in Annapolis, Md.,
and handles over 40 million pounds of recycled plastics a year.
In announcing the acquisition, Martin Sergi, president of KTI, said,
"The acquisition of FCR expands KTI's geographic reach and diversification and
builds on its integration objectives. This nearly doubles the size of our
company and also adds significant recycling assets. Through its U.S. Fiber and
FCR Plastics divisions, FCR provides further downside protection against price
volatility often associated with recycled materials. KTI is now poised to
provide waste-processing services not only to communities in our traditional
Northeast areas but also to municipalities in several other regions in the U.S.
In particular, we can now offer viable alternative solutions to national waste
management firms that have hauling and landfilling operations as their core
business and seek reliable alliances for their recycling needs. We expect the
acquisition to be accretive to earnings by the fourth quarter of 1998."
KTI Chairman Ross Pirasteh said, "We are delighted that as part of this
transaction, Paul Garrett joins our management team as vice chairman and a
member of the Executive Committee along with Marty and me while continuing in
his role as CEO of FCR. Paul is a dynamic executive with an outstanding record
of accomplishments. It has been an announced goal of ours for some time to find
ways to strengthen the top tier of our management structure. The addition of
Paul and his senior executives to our team is an important step forward in
meeting that need. We expect to unite KTI's existing business units which
operate in FCR's industries under Paul's leadership. We are also extremely
pleased that Key Bank is continuing to play a significant supporting role in
our growth strategy."
Garrett said, "The combination of KTI and FCR creates a strong and
important new force in America's recycling industry and provides us with new
resources to continue our growth through acquisition as well as through
constant internal improvement. I am delighted to be joining forces with the KTI
team as we work to build additional shareholder value."
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KTI is a fully integrated waste management company whose core
reputation was established in the waste-to-energy sector. In addition to the
new FCR operations, KTI owns and operates two waste-to-energy facilities in
Maine: a biomass-to-energy plant in Florida, and wood processing operations in
Maine and Georgia. Collectively, these businesses handle in excess of 1,000,000
tons of material annually.
KTI also owns and operates major recycling facilities in Boston, Newark
and Chicago, holds a majority interest in America's only commercially
operational municipal waste ash recycling facility in Nashville, Tenn. and owns
a full-service environmental company based in Newington, N.H., a Maryland
company specializing in marketing post-industrial recycled plastics, a paper
and metals recycling company in Biddeford, Maine and a world wide secondary
fiber marketing company based in Portland, Ore.
For further information, contact Marty Sergi at KTI, Inc. (201)
854-7777 or Frank N. Hawkins, Jr. or Julie Marshall at Hawk Associates, Inc.
(305) 852-2383. Copies of KTI press releases, SEC filings, current price
quotes, stock charts, analysts' comments and other valuable information for
investors may be found on the website http://www.hawkassociates.com.
This release contains various forward looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 which represents the company's expectations or
beliefs concerning future events of the company's financial performance. These
forward looking statements are qualified by important factors that could cause
actual results to differ materially from those in the forward looking
statements. Results actually achieved may differ materially from expected
results included in these statements.