Quarterly report pursuant to Section 13 or 15(d)

ACQUISITION OF BASF FACILITY

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ACQUISITION OF BASF FACILITY
 9 Months Ended
Sep. 30, 2016
ACQUISITION OF BASF FACILITY [Abstract]  
ACQUISITION OF BASF FACILITY
6. ACQUISITION OF BASF FACILITY

On May 2, 2016, we purchased the idle BASF facility adjacent to our TC facility in exchange for $2.0 million in cash, transaction costs of approximately $11,000 plus an earnout provision calculated through calendar year 2020 based upon revenue generated by the facility but limited to $1.8 million.  The cash payment was funded by working capital. The purchased facility includes production equipment similar to TC’s plus equipment that broadens TC's capabilities and potential markets.  The 6.5-acre site also includes substantial storage capacity, several rail and truck loading sites and utility tie-ins to TC.  We refer to the facility as “B Plant”.

We have accounted for the purchase in accordance with the acquisition method of accounting under Financial Accounting Standards Board Accounting Standards Codification Topic 805 “Business Combinations” (“ASC 805”).  In accordance with ASC 805, we used our best estimates and assumptions to assign fair value to the tangible assets and liabilities acquired at the acquisition date.  These estimates are provisional and may be adjusted in future filings.

The assets and liabilities acquired have been included in our consolidated balance sheets and our consolidated statements of income since the date of acquisition.

We recorded an $11.5 million bargain purchase gain on the transaction as calculated in the table below (in thousands).

Cash paid
   $ 2,011        
Estimated earnout liability
     733        
Purchase Price
           $ 2,744  
                 
Fixed assets at FMV
                
Land
     980          
Site improvements
     30          
Buildings
     1,350          
Production equipment
     11,933          
              14,293  
                 
Bargain purchase gain
           $ 11,549  
 
The business acquired has been idle for the periods presented thus proforma financial presentation would be identical to our consolidated results.  We began operating the new facility in June 2016.