General Environmental Management, Inc. (GEVI.OB) Announces Acquisition of Santa Clara Waste Water

In the company’s news yesterday,

General Environmental Management, Inc. announced that it has completed the acquisition of Santa Clara Waste Water (SCWW), a profitable, 50 year old, full service environmental services company focused primarily on the waste water treatment business. To date, SCWW has treated more than 2 billion gallons of waste water and is recognized as one of the top 100 privately owned non-hazardous waste water utilities in the United States.

GEM financed the acquisition through the issuance of six promissory notes in the aggregate principal amount of $9,003,000, along with warrants for the principals of SCWW to purchase 425,000 shares of GEM’s common stock. The notes bear interest at 6.5 percent per annum. Two of the Notes, totaling $3,778,000, are convertible into a total of 15% of GEM’s common stock on a fully diluted basis. Details of the notes can be found in the 8-K issued by the company.

“We are thrilled to have completed the acquisition of SCWW,” stated Tim Koziol, GEM Chief Executive Officer. “We plan to work with SCWW CEO Doug Edwards and his team to achieve the goal of becoming the premier independent non-hazardous wastewater management company; First in California, then the western region and eventually in the United States.”

Koziol continued, “As I have said repeatedly, we are acquiring not only a successful company with a great track record and valuable assets, we are partnering with one of the finest management teams in the environmental management industry. Doug and his team have set the standard for wastewater management. Their facility situated on five acres of strategically located land in Santa Clarita Valley, along with their unique and invaluable 12.7 mile pipeline from their facility to Oxnard’s water reclamation center, gives GEM a corner stone to build a regional and then national presence in the water treatment market.”

“This is an important day in SCWW’s journey to become a national waste water treatment company,” commented Doug Edwards. “I am very excited to be uniting with GEM’s management team to build upon the success we have earned at SCWW. I have long had a vision of growth for SCWW and I am confident that by teaming with GEM, we will be able to help make that vision a reality. The waste water treatment market is large and will continue to grow as demand for water treatment increases exponentially. SCWW is uniquely positioned to take its assets, experience, knowledge set and strategic plan and become one of the foremost waste water treatment companies in the U.S. In addition, we have a number of unique products and services in development that we can bring to market faster and with greater efficiency with the help of GEM’s talented management group.”

GEM Chief Financial Officer, Brett Clark, added, “SCWW has a profitable, high margin business model. We are acquiring the company and all of its assets for approximately three times its trailing EBIDTA, plus the assumption of long term debt secured by SCWW’s plant and equipment. SCWW’s revenues in 2008 were approximately $7.6 million. The transaction is very accretive to GEM, and the terms of the transaction are very favorable to the shareholders. Again, the details of the transaction can be found in the 8-K.”

Because of the timing of the closing of this transaction, GEM’s management has filed for an extension in filing its 10Q for the quarter ended September 30, 2009 and will reschedule its earnings conference call to Monday, November 30, 2009 at 1:30 pm PST.

Providing an update on GEM’s efforts to sell its field services business in order to focus on new business opportunities, Koziol stated, “We have made great progress over the past month in our efforts to sell our field services business. We are actively engaged with the prospective buyer and will close this transaction as soon as practically possible. Our goal is to eliminate the majority of our debt and to refocus all of our operating efforts on the more profitable and faster growing waste water and waste-to-energy markets.”

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