Metalclad Sells Mexico Holdings

Metalclad Corp. said Thursday it has sold its stakes in three Mexican units for $5 million to Geologic S.A. Mexico. As part of the deal, Geologic also agreed to assume $3.8 million of debt.

Newport Beach-based Metalclad, an insulation and asbestos treatment company, announced earlier this year that it planned to pull out of Mexico after one of its businesses was seized there.

Metalclad said it expects to take a charge of $585,000 during the fourth quarter for foreign currency exchange losses in connection with the sale of its interests in the units--Administracion Residuos Industriales S.A., Ecosistemas Nacionales S.A. and Quimica Omega S.A. The company posted a loss of $4.8 million for 1998 on sales of $10 million.

Metalclad also retained ownership of a $22-million hazardous waste site in the state of San Luis Potosi. The facility was seized by the state government as it was scheduled to open in 1995.

Unable to negotiate a settlement with the government of the state, Metalclad filed an arbitration claim against the Mexican government under the North American Free Trade Agreement. The company said it expects a decision in January by the NAFTA Tribunal in Washington.

Metalclad also said it reserved its right to pursue a claim under the NAFTA treaty for the loss of its investment in a landfill project in the state of Aguascalientes because of the alleged interference of the Mexican Ministry of Commerce & Industrial Development.