The Way The Old Rubber Crumbles

Not everything in today's hot IPO market is Internet-related. One issue that some pros like--GreenMan Technologies (GMTI)--is nowhere near cyberspace: It's in tire recycling. GreenMan went public on Oct. 3 at 5 a share. On opening day, the stock jumped to more than 8 and stayed there for eight trading days--until profit-taking spoiled some of the fun. But some money managers still think it's worth loading up on GreenMan--now at 6.

What's the allure of tire recycling? GreenMan uses a patented cryogenic (low-temperature) technology to make used tires brittle, thus yielding crumb-rubber granules. These granules are a low-cost source of rubber and plastic waste, according to one money manager who has a sizable stake. GreenMan's chief product is a proprietary thermoplastic rubber material that uses crumbs from discarded tires. GreenMan uses it to produce water filters, pumps, stereo components, and computer accessories.

On Dec. 14, Browning-Ferris Industries, a major player in solid-waste collection and recycling, signed an exclusive contract for GreenMan to build and operate a crumb-rubber processing facility on Browning's site in Jackson, Ga. It will convert a minimum of 32,000 tons a year of shredded tires into high quality crumb rubber. Browning-Ferris may buy an equity stake in GreenMan, speculates one analyst.

Revenues for the year ending May 31, 1996, are expected to be $7 million to $10 million, in part from a $2 million contract with Coca-Cola--for GreenMan to make display racks of recycled rubber. One analyst sees GreenMan going into the black in 1996.