Things are getting messy for cyclean inc., which

recycles road surfacing material for the city

of l.a. and is facing an increase in competition

It started out as an intriguing idea: With cities running out of landfill space, why not recycle asphalt, rather than haul it to dumps, and then reuse it on other roads in need of repaving?

That's what Robert Nath sought to do in 1983, when he founded Cyclean Inc. He succeeded in getting venture capital funding and rode the environmental services boom of the '80s. The company then got its big break in 1987, securing a five-year contract with the city of Los Angeles to supply recycled asphalt for the nearly 200 miles of road that are resurfaced each year.

Nath is mostly out of the picture now, having moved on to another business (although he's still a Cyclean director), and now the company finds itself at a crossroads. Its one major remaining customer still the city of Los Angeles has put Cyclean's contract out to bid.

Since first winning the L.A. contract in 1987, Cyclean had been the sole bidder capable of meeting the city's exacting quality and environmental requirements. But this time around, there are two others in contention.

If Cyclean loses its contract this spring, the San Fernando-based company must hustle to find other contracts. "There's no question that would be quite a challenge," said John Crowe, Cyclean's vice president of sales.

(After Nath left, no successor was named, leaving Crowe in charge of sales and Bill Grant the vice president in charge of operations. Both report to the principals of Silicon Valley-based Technology Funding Inc., a major equity owner.)

Uncertain future

Cyclean and Technology Funding officials declined to reveal their specific contingency plans should they lose the L.A. contract.

"We're not going to say that we would quickly run out of money or close all operations," said Greg George, vice president of Technology Funding. "We would obviously focus full-time on getting new contracts. And if those contracts are not in the L.A. area, it may mean we move out of L.A. That would be unfortunate, but as a small company, we need to have all our resources near the primary operating centers."

Whatever happens with the city of L.A. contract, Crowe and other Cyclean officials are hoping they can convince other cities to embrace the firm's recycling process. They are currently talking with Chicago, Mexico City and others.


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