Eco Soil’s Turf Partners Sale To J.R. Simplot Amended

The amendment includes a fixed purchase price for Turf Partners' assets that will be payable in cash at the closing of the transaction and will not be subject to adjustments based on an EBITDA (earnings before interest, taxes, depreciation and amortization) calculation contemplated by the original agreement.

The total purchase price includes a payment to ESSI of $23 million, assumption of Turf Partner's bank debt of approximately $17 million and assumption of Turf Partners' liabilities associated with its existing vendors, contracts and leases. In addition, the amendment eliminates the requirement that ESSI deliver a tangible net worth of $3 million, which eliminates ESSI's requirements to repay at least $7 million of inter-company debt to the subsidiary.

Releases about the original agreement, dated March 28, stated that Simplot would make a down payment of $20 million that was subject to adjustment if: (a) Turf Partners’ net tangible assets at June 30, 2000 were more or less than $3 million, (b) if Turf Partners had not generated at least 75 percent of the EBITDA it had projected for the first six months of 2000 or (c) if Turf Partners failed to satisfy other balance sheet tests. Under the initial agreement, Simplot would have then paid the balance of the purchase price in March 2001. [For more information about the original agreement, please click here: Eco Soil to Sell Turf Partners to J.R. Simplot.]

William Adams, ESSI chairman and CEO, said, "We are very pleased with the terms of this amendment. The fixed purchase price provided by the amendment will benefit Eco Soil and its shareholders by eliminating a potential downward adjustment in the purchase price as provided in the earlier agreement."

At the signing of this amended agreement, Simplot has agreed to provide a $2 million letter of credit and a loan of $3 million to be used for working capital purposes. The $3 million loan is to be repaid at the close of the transaction.

The deal is subject to Eco Soil shareholder approval and other conditions, and is expected to close in July.

In addition to the amendment to the asset purchase agreement, Eco Soil and Simplot have agreed to the terms of two distribution and supply agreements and one field trial agreement. In the first agreement between Turf Partners and Eco Soil Systems, Simplot has agreed to purchase a minimum of $5 million of FreshPack™ product over the first two years of a five-year agreement.

Adams noted, "Our proprietary product sales in turf are secured under this distribution and supply agreement, and should continue to grow. In the second agreement, Simplot has agreed to a market test of Eco Soil's proprietary products in ten of its SoilBuilders stores."

For more information about the companies, visit Eco Soil web site at www.ecosoil.com or J.R. Simplot’s web site at www.simplot.com.