Would-be used oil reprocessor Probex Corp. has sold its used oil collection business to pay off part of its defaulted debt. The company said the lack of an in-house collection operation should not hurt the viability of its planned plant in Wellsville, Ohio.
Probex, of Addison, Texas, announced March 27 that Atlantic Oil Collection Services Inc. had bought the assets of its collection business for $1 million. Probex said it would use the money to pay off part of the $12 million outstanding balance of senior secured debt held by subsidiary Probex Fluids Recovery Inc. Altogether, Probex is in default on $25.4 million of debt.
The debt was originally scheduled to be paid off by the end of February, although creditors holding nearly half of the total allowed a one-month extension. Probex officials have said they are trying to extend or restructure the debt but that the company may have to file for bankruptcy protection if it does not succeed.
The Wellsville project, which was announced two years ago, calls for a plant that would process up to 183,000 metric tons of used lubricants annually. Probex has cleared most of the major hurdles but has not yet obtained the $100 million in financing needed to pay for the project.
In announcing the sale of its collection business, Probex noted that it has non-binding commitments from a number of third parties to supply used oil feedstock at market prices on a long-term basis. It said it will now try to convert those commitments to binding contracts.