BOSTON, July 7, 2010 — Converted Organics Inc. (Nasdaq:COIN) announced today that it has entered into an agreement to acquire TerraSphere Systems, a Massachusetts LLC and a rapidly growing pioneer in the vertical farming market. Completion of the $26 million all stock transaction would be the Company's largest acquisition to-date and is subject to the approval of Converted Organics' shareholders.
TerraSphere designs, builds and operates highly efficient and scalable systems, featuring a patented, proprietary technology that utilizes vertically-stacked modules to house rows of plants, which are then placed perpendicular to an interior light source to grow pesticide-free organic fruits and vegetables. Due to a controlled, indoor environment, the system generates fresh produce year-round in any location or climate world-wide. Other key TerraSphere highlights include:
— Three U.S. patents with several international applications pending; vertical farming innovation is expected to revolutionize the $180 billion agriculture market
— Superior to traditional growing methods, including a 10 x greater crop yield per sq. ft.
— Compact facilities conserve and dramatically reduce the use of critical resources such as land, water and power
— Has entered into four agreements for equipment purchases and licensing in 2010 for a total value of $4.49 million
— Five licensed territories include British Columbia, Atlantic Canada, New York, Massachusetts and Ontario
— Current partners include Western Canada's largest grocer of natural and organic food, Choices Market
— Currently operates a fully functional TerraSphere facility for the Squamish First Nation of Vancouver, B.C. and plans on harvesting its first commercial crop within the next two weeks.
TerraSphere's YTD 2010 revenue is $4.49 million. "Converted Organics' acquisition of TerraSphere would expand our growing portfolio of sustainable, environmentally-friendly businesses, and would provide an immediate revenue stream for our Company," said Edward J. Gildea, President of Converted Organics. "We believe TerraSphere's unique business model and range of patents will allow Converted Organics to quickly emerge as an early leader in the dynamic, new vertical farming industry. We are confident that the acquisition of TerraSphere will provide a number of exciting new growth opportunities for Converted Organics and help us generate value for our customers, partners and shareholders."
Vertical farming provides a valuable urban agricultural model that allows locally grown, fresh, pesticide-free produce to be cultivated closer to population centers, resulting in lower supply chain costs, as well as reduced carbon emissions and fuel costs associated with traditional production and distribution methods. These controlled growing environments protect crops from weather-related problems, eliminate the need for synthetic pesticides, herbicides and fungicides, reduce nitrate run-off and help preserve natural resources through a reduction in the need for additional farmland.
"Current economic, societal, political and regulatory trends have created strong demand for innovative agricultural solutions and a significant market opportunity for innovators such as TerraSphere and Converted Organics," said Nick Brusatore, inventor and co-founder of TerraSphere Systems. "This combination will enable us to more effectively pursue our growth objectives, better addressing both environmental concerns and the growing global need for food security. We look forward to becoming a part of the Converted Organics family and advancing the technology that we believe will help shape the agricultural, organic, and vertical farming markets."
Completion of the transaction is subject to a number of conditions, including Converted Organics' shareholder approval. The transaction cannot close until the required shareholder approval is obtained. Converted Organics expects to hold a Special meeting of its shareholders in September 2010 at which time the approval of shareholders for the acquisition will be sought.
Additional Information
Shareholders of Converted Organics and other interested persons are advised to read, when available, Converted Organics' definitive proxy statement in connection with the solicitation of proxies for the special meeting because such proxy statement will contain important information.
The definitive proxy statement will be mailed to shareholders as of a record date to be established for voting on the proposed acquisition. Shareholders will also be able to obtain a copy of the definitive proxy statement, without charge, once available, at the SEC's website, http://www.sec.gov, or by directing a request to Converted Organics at 137A Lewis Wharf, Boston, MA 02110.
Converted Organics and its officers and directors may be deemed to have participated in the solicitation of proxies from Converted Organics' shareholders in favor of the approval of the acquisition. Information concerning Converted Organics' directors and executive officers, including descriptions of their security holdings, is set forth in the publicly filed documents of Converted Organics. Shareholders may obtain more detailed information regarding the direct and indirect interests of Converted Organics' directors and executive officers in the transaction by reading the preliminary and definitive proxy statements regarding the transaction, which will be filed with the SEC.
Source: Converted Organics Inc.