Drosrite International LLC Incorporates Letter of Credit into US$17M Contract with Radian Oil & Gas Services Company; Provides Update
MAHWAH, N.J., Nov. 26, 2019 (GLOBE NEWSWIRE) -- Drosrite International LLC, a private waste management technology company based in New Jersey, USA, (the "Company", the “Corporation” or "Drosrite International") today announces that, further to its press release of November 13th, 2019, the Company and Radian Oil & Gas Services Company (“Radian” or the “Client”) have agreed to put in place a Letter of Credit (“L/C”) with respect to the US$17M contract (the “Contract”).
Mr. Alex Pascali, CEO of Drosrite International provides an update in the following Q&A format:
Q1. Why a L/C?
A. A L/C ultimately de-risks, to a considerable degree, the payment schedule of this ~US$17M Contract as it will now be guaranteed by the Client’s bank. In essence, this ensures that Drosrite International will get paid as long as it submits the agreed upon documentation for each payment milestone. Simply put, it confirms that the funds will be available when the Company makes a claim upon the Client by providing the bank the agreed upon documentation confirming the milestone payment.
This type of L/C is one that is provided by Radian’s bank to the Company’s bank and references in detail the conditions upon which the Client’s bank will pay our bank. In the event that the Client is unable to make a payment, their bank will be required to cover the full amount.
From the Client’s perspective, using a L/C ensures that they only pay for an achieved milestone after evidence has been provided to that effect. In fact, this has become a very important aspect of international trade, especially in the Middle East and Europe.
As of this past weekend, all parties have agreed upon events which can (i) serve as a milestone, and (ii) be easily documented for the purposes of executing under this L/C. What now remains is to draft the L/C document, which ultimately combines the simple documents with each L/C event.
Q2. Could you also provide some background to this Contract?
A. Definitely. Drosrite International had previously entered into a mutually exclusive arrangement with Radian to provide DROSRITE™ systems to Radian in their competitive bid in an aluminum dross processing project, which they ultimately won based on, amongst other things, the DROSRITE™ technology.
We will now manufacture, under a limited exclusive arrangement to sell DROSRITE™ systems, five (5) DROSRITE™ 5,000 TPY systems, plus two (2) 10,000 TPY systems to treat 30,000 to 40,000 tons per year of white and black aluminum dross. In addition, the Company will oversee the installation of the systems at the aluminum facility. The Company will also supply spare parts over a 20-year period and benefit from an annual royalty stream. The Contract is for ~US$17 million in first year revenue, in addition to (i) future spare parts, and (ii) annual royalty payments. All DROSRITE™ systems will be manufactured in the United States.
Q3. Seven systems in all. Isn’t that quite a large contract?
A. Indeed it is. It was one of the largest, if not the largest, single contract put out to bid that we know of and, as a result, it was as a highly competitive process attracting every credible player each sharpening their pencils as best as they could. We are happy and proud to be the supplier of the DROSRITE™ technology to the winner of the process: Radian Oil & Gas Services Company.
Q4. For those that are new to the story could you please take a step back and explain what DROSRITE™ is and some of its many advantages?
A. Most certainly. The DROSRITE™ system is a salt-free, cost-effective, sustainable process for maximizing metal recovery from dross, a waste generated in the metallurgical industry. This patented process avoids costly loss of metal while reducing a smelter's carbon footprint and energy consumption, thereby providing an impressive return on investment.
With metal manufacturers, such as aluminum, being subjected to increased pressure from regulatory authorities to eliminate landfilling of hazardous salt cakes from traditional recovery operations, combined with tight operating margins, The DROSRITE™ system is able to (i) increase metal recovery from waste, without producing any hazardous by-products, while at the same time (ii) reducing operating costs. In short, we offer (i) a salt-free process (ii) which can process the dross cheaper than conventional methods, and (iii) with demonstratable higher metal recovery rates.
Q5. You mentioned in your October 9th press release that “…The formal signing is expected to take place within the next two (2) weeks, with a down payment to be received shortly thereafter…”. Then you announced on November 13th, 2019 the signing. Could you comment on this and the status of the down payment?
A. Sure. At the time of our October 9th press release we did expect to sign by the end of the month, and all things were aligned to do just that. As one might expect though, any small item has the potential (given the different time zones, need to translate documents etc.) to magnify any delay. Add to that the challenge of rearranging schedules for a formal signing, and you will find that a two (2) week delay for a ~US$17M Contract to be entirely reasonable and, I would even suggest, should be expected by any reasonable person with a cursory knowledge of such things.
Once the Contract was signed, one would have expected that the down payment would have been wired within ten (10) days, which would have seen the funds arrive sometime during the week of November 18th. Towards the end of the previous week we were asked if we could accommodate payment by Letter of Credit as that is a more common method of payment in the region. We agreed, which is the subject of this press release.
Q6. So from the sounds of it, it is full steam ahead?
A.A resounding YES to that! As I said, one can expect delays for a deal of this size given the distances, time zones, and translation requirements and, so far, all have been reasonable. I would go so far as to say that any delay that strengthens our position, as the Letter of Credit does, should not be considered a delay in the same breath as delays are usually considered.
Q7. Any closing comments?
A. Yes. The message here today is that everything is on track. All is good. Everybody is on the same page, and we look forward to the next couple of weeks and kicking off this project as soon as possible. We are all biting at the bit to get this project started, and none more than Radian.
About Radian Oil & Gas Services Company
Radian is a private Saudi Arabian company providing technologies that help customers conserve energy, operate more efficiently through a broad range of solutions while saving fuel, water / electricity & reducing CO2 emissions. Radian is owned by the HAKA Group, an established conglomerate business founded in 1967 which is also based in the Kingdom of Saudi Arabia. The group is operating in a diverse range of business sectors from logistics to food and drink and from construction to real estate, owning a flourishing mix of brands under its umbrella.
About Drosrite International LLC
Drosrite International LLC, is a US based private company duly constituted and existing under the laws of the State of Delaware, providing state-of-the-art waste management technologies to the aluminum industry. The Company is duly licensed and has the right to manufacture, market, sell and distribute DROSRITE™ systems and technology. All DROSRITE™ systems supplied by Drosrite International are manufactured in the USA.
The Company’s core business is to promote, under a limited exclusive arrangement, the trademarked DROSRITE™ systems and technology; a revolutionary salt-free rotary tilting furnace for maximizing the recovery of non-ferrous metals from dross.
Drosrite International’s focus is to supply DROSRITE™ systems, together with complete plant and accessories, required for the recovery of aluminum dross. Drosrite International LLC is in discussion with other smelters to provide this type of service on a direct/indirect basis.
This press release contains certain forward-looking statements, including, without limitation, statements containing the words "may", "plan", "will", "estimate", "continue", "anticipate", "intend", "expect", "in the process" and other similar expressions which constitute "forward- looking information" within the meaning of applicable securities laws. Forward-looking statements reflect the Corporation's current expectation and assumptions and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These forward-looking statements involve risks and uncertainties including, but not limited to, our expectations regarding the acceptance of our products by the market, our strategy to develop new products and enhance the capabilities of existing products, our strategy with respect to research and development, the impact of competitive products and pricing, new product development, and uncertainties related to the regulatory approval process. Such statements reflect the current views of the Corporation with respect to future events and are subject to certain risks and uncertainties and other risks.
Actual results, events, and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements. The Corporation undertakes no obligation to publicly update or revise any forward- looking statements either as a result of new information, future events or otherwise, except as required by applicable securities laws.
SOURCE Drosrite International LLC
For further information please contact: Media Relations, Phone: (201) 512-8701, E-mail: media@drosrite-international.com
