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Nuverra Environmental Solutions (NYSE:NES) (“Nuverra” or “the Company”) today announced that it has entered into a definitive agreement to divest the Company’s Industrial Solutions segment, Thermo Fluids Inc. (“TFI”), to VeroLube, Inc. (“VeroLube”). VeroLube is developing two re-refineries with a patented technology, and focusing on a consolidation of the used oil industry.
Under the terms of the agreement, Nuverra will receive $165 million in cash and $10 million in VeroLube shares. The cash portion of the transaction is subject to adjustment based on the actual working capital conveyed at closing. The sale is expected to close in the second quarter of 2014, subject to customary conditions, including regulatory approval and final confirmatory legal and environmental due diligence. Nuverra intends to use the proceeds from the transaction to pay down debt and for general corporate purposes.
Mark D. Johnsrud, Nuverra’s Chief Executive Officer, stated, “I am very pleased to enter into this definitive agreement, which is consistent with the strategy we have previously discussed to focus exclusively on growing our core shale environmental solutions business. Our team has done a tremendous job executing our business transformation strategy, and while we have more to do, I am very excited about our Company and its future. I believe the vertical integration and consolidation strategy that the VeroLube and Canaccord Genuity team is focusing on is very compelling, and Nuverra is excited to receive VeroLube equity as part of our payment consideration.”
The transaction is subject to a financing condition and provides VeroLube until June 25, 2014 to fund and close the transaction. VeroLube has engaged the Canaccord Genuity Corp. (“Canaccord”) to complete the financing. Terry Lyons, the Chairman of VeroLube, has successfully grown a number of businesses, and currently serves or has served on the management team or board of a number of leading Canadian companies. More information on VeroLube, its Board of Directors, Advisory Board, and management team can be found on its website at
VeroLube’s business strategy is to consolidate the used oil collection industry and develop re-refineries using its patented ReGen
TM process to recycle and process used oil. VeroLube believes its ReGen
TM process allows for 75% of re-refined outputs to be high quality base oils for use as lubricants, with the ability to produce 50% of output as Group III base oils without hydro-treating. In addition, VeroLube believes the process allows for lower operating cost than alternative re-refining technologies.
Mr. Lyons commented: “TFI provides us with a significant platform and immediate scale, including established public company corporate support and accounting capabilities, to expand our business and execute on our consolidation strategy. We also see significant synergies between TFI’s collection volumes and VeroLube’s proprietary re-refinery process. We have engaged Canaccord as our financial advisor, and they have had numerous successes – including with some of my previous enterprises – in raising growth capital for compelling business models like VeroLube that introduce technological change and create added value. I look forward to working with the team to deliver on this opportunity.”