AVALON HOLDINGS CORPORATION (NYSEAMERICAN: AWX) Files An 8-K Material ImpairmentsITEM 2.06Material Impairments
On December 6, 2018, Avalon Holdings Corporation (“Avalon” or the “Company”) and its Board of Directors concluded that a non-cash, pre-tax impairment charge will be recorded in the fourth quarter of the fiscal year ending December 31, 2018, representing the full carrying value of the Company’s salt water injection wells, which is estimated to be in the range of $3.1 million to $3.3 million. The conclusion was made in connection with the Company’s annual impairment testing, which is not yet finalized, and the overall uncertainty that the salt water injection wells will resume operations in the near future.
As previously reported, on November 21, 2018, AWMS Water Solutions, LLC, a wholly owned subsidiary of Avalon, received notice from the Supreme Court of Ohio (the “Court”) that the Court would not accept for review the Company’s appeal of the Ohio 10th District Court of Appeals decision on the Division of Oil and Gas Resources Management’s appeal of the Franklin County Court of Common Pleas February 21, 2017 entry allowing restart of the Company’s AWMS Water Solutions, LLC #2 salt water injection well.
Based on the Court’s decision not to accept the appeal for review and the economically unfeasible conditions required by the Division of Oil & Gas Resources Management to restart the well, management of Avalon concluded that the injection wells would not resume operations in the near future and that the carrying value of the salt water injection wells was not recoverable.
The impairment charge will be included in the operations related to the waste management service’s segment for the fiscal year ending December 31, 2018. No cash expenditures are anticipated as a result of the impairment charge. The impairment charge will not affect the Company’s compliance with debt covenants under its Term Loan or Line of Credit agreements.