GTS Duratek Inc., a Columbia-based technology company involved in environmental cleanup, said yesterday that it had agreed to sell a controlling interest in the company to the Carlyle Group.
Under terms of the preliminary agreement, Carlyle, a Washington-based investment banking firm, could end up with 51 percent of the shares of Duratek, a small company that has been working on technology to convert low level nuclear waste into glass for safe storage. Carlyle would also receive a majority of the seats on the company's board of directors.
Robert E. Prince, president and chief executive of Duratek, called the financing arrangement with Carlyle "a great deal for our company. This gives us the capital we need to realize the potential of this company."
He pointed to an agreement that Duratek recently reached to form a joint venture with Chem-Nuclear Systems Inc., a Columbia S.C.-based division of WMX Technologies Inc., to build and operate a facility for converting commercial nuclear power plant waste into glass.
"Our share of the cost would be a half-million," he said. "We need funding to build the equipment."
Under the proposal, Carlyle would acquire $16 million in newly issued convertible preferred stock of Duratek. The preferred shares could eventually be converted into common stock at $3 a share. Carlyle also would have the option to buy up to 1.25 million additional Duratek common shares at $3.75 each over the next four years.
Duratek's stock closed yesterday at $3.50, up 12.5 cents a share.
The agreement also calls for Carlyle to purchase 1.67 million shares of Duratek stock that is now owned by National Patent DTC Development Corp., a New York-based company that invests in technology companies. Carlyle also has the option to acquire an additional 500,000 shares from National Patent over the next year at $3.75 each.
Assuming the proposed transactions were complete, National Patent's interest in Duratek would drop from 61 percent to about 25 percent.
Mr. Prince said that National Patent agreed to surrender its control of Duratek to allow the Carlyle investment to move forward.
"They are still a major shareholder," he explained, "and they realized we needed additional capital to be a better investment for them and all of our other stockholders."
Thomas T. Taylor, president of Chesapeake Research Inc., a Towson-based brokerage that specializes in mid-Atlantic based companies, said the Carlyle investment would be a "big boost" to Duratek as it moves into the business of cleaning up waste at government owned nuclear weapons facilities around the country.
He said Carlyle, which has former Defense Secretary Frank C. Carlucci as part of its top management, could help Duratek as it pursues government contracts.
Daniel D'Aniello, a managing director of Carlyle, said the company was attracted by Duratek's technology.
In addition to developing a process to convert low level nuclear waste into glass for safe storage, Duratek recently demonstrated an ability to transform asbestos into glass that could be later made into such things as counter tops, building bricks or road materials.
"They are clearly at the cutting edge of their science," said Mr. D'Aniello. "It's wonderful to make an investment that's ahead of the technology curve."
Mr. D'Aniello said Carlyle has no plans to alter the management or work force of Duratek. "We like the management. We think they're competent and capable people."
Mr. Prince said yesterday's announcement represented the culmination of work that began more than a month ago when Duratek hired Gruntal & Co. in New York to look for a $5 million investment in the company.
"Gruntal found Carlyle," Mr. Prince continued, "and Carlyle said 'Five million, that's interesting. What would you do if we gave you a lot of money?'
According to Mr. D'Aniello, Carlyle already has controlling or minority interest in eight other companies. They include BDM International Inc., a professional services company in McLean, Va., with contracts from the departments of defense and energy; Magnavox Electronics Systems, a defense communication and electronics company; and PTS Holdings, a power system supplier.
Mr. D'Aniello said the companies it has invested in generated more than $3 billion in revenues last year.
GTS DURATEK INC.
Employees: 86 in Maryland
Businesses: Environmental service and technology
Chief executive: Robert E. Prince
1993 revenues: $33.5 million
1993 loss: $1.3 million
Facilities: Columbia and Beltsville.
$3.50, up 12.5 cents