Converted Organics ‘committed’ to R.I.

JOHNSTON – Waste-to-fertilizer manufacturer Converted Organics Inc. is still “100 percent committed” to building a 40,000-square-foot facility next to the R.I. Central Landfill, one of the company’s investors told Providence Business News today.

“We are going to build a facility here in Rhode Island,” David Darlington – who owns 10 percent of Converted Organics Rhode Island LLC, the subsidiary that is building the Johnston plant – said in a telephone interview. “We have a site. We are in the permitting process for the site.”

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The Johnston project’s fate was in question earlier this week when Converted Organics announced that cash-flow problems had forced the company to revise agreements with its lenders and that it was planning to meet with the R.I. Resource Recovery Corporation (RIRRC) to determine the project’s future.

Darlington acknowledged that the ongoing turmoil in the credit markets has caused Converted Organics (Nasdaq: COIN, COINZ) to postpone the sale of $15 million in R.I. Economic Development Corporation (EDC) bonds, which were to pay for the bulk of the $18 million project.

The EDC approved the bond allocation last November, but investment bankers at Piper Jaffray & Co. advised Converted Organics not to float the bonds because in a distressed market the interest rate would be prohibitively high, particularly for an early-stage firm, Darlington said.

Although the bonds are technically the EDC’s, it is up to Converted Organics to sell and repay them. Piper Jaffray is “advising us they wouldn’t sell, or would sell for a rate that we couldn’t afford to pay at this moment,” he said.

“The environment is still very difficult for those kinds of bonds to get sold into the marketplace,” said Darlington, who is also chairman of the R.I. Turnpike & Bridge Authority. “The markets are still very tentative about small companies issuing bonds.”

The bonds allocated in November reverted to the EDC at the end of last year, which is standard practice, Darlington said. Officials at the development agency are aware of Converted Organics’ situation and have said the bonds will be available again when the company is ready to take them to market, he said.

At this point, the company does not know when that will be, Darlington said. “As soon as they [Piper Jaffray] tell us the markets are ready for the bonds, we’ll be back at EDC to get the bonds and we’ll be out selling for our projects,” he said.

In addition, Darlington said Converted Organics plans to meet soon with officials from the RIRRC, which operates the Central Landfill, to review the terms of a lease RIRRC granted the company last August for 9 acres of land in the new Lakeside Commerce Industrial Park in Johnston, which is to be the location of the plant.

But Darlington emphasized repeatedly that Converted Organics plans to proceed with the Rhode Island facility. The company currently operates plants in Woodbridge, N.J., and Gonzales, Calif. (READ MORE) “Johnston … absolutely will be the next site that we build,” he said. The company estimates that plant will create about 45 new jobs when it is fully operational.

Darlington also said Converted Organics remains confident that its product – organic liquid and solid fertilizers that are high in nutrients and not made from human or animal waste – will be a success. The products are now on the shelves of major retailers in select markets and have begun generating revenue for the company, he noted.

Converted Organics Inc. (Nasdaq: COIN, COINZ) is a development-stage company dedicated to producing environmentally-friendly soil amendments or fertilizers – for the retail, turf and agribusiness markets – through the recycling of food waste. Its manufacturing facilities aim to minimize negative environmental impacts on host communities. For more information, go to ConvertedOrganics.com.

The R.I. Resource Recovery Corporation, manager of the state Central Landfill in Johnston, was created by the R.I. General Assembly in 1974 to provide environmentally sound programs and facilities for managing solid waste generated in Rhode Island. Additional information is available at www.rirrc.org.