Weekly News Bulletin: Aug. 20-26, 2008


Republic Rejects Revised Waste Management Offer

Republic Services rejected Waste Management's enhanced second and still unsolicited offer of $6.7 billion saying that it "still substantially undervalues" the company. Frustrated by an offer that represents a mere 5% premium over the company's 52-week high, management reiterated its commitment to merge with Allied Waste Industries Inc. as a better deal for investors. In a letter to Waste Management CEO David P. Steiner, Republic's CEO James O'Connor stated that "Our shareholders have expressed to us, privately and publicly, their appreciation of the potential value of the Republic-Allied Waste merger. Based upon our contacts with shareholders, our Board believes that Republic shareholders would not want that potential value sold on the cheap."...Read More »



Republic Services' Lenders Commit $1.75 Billion to Allied Merger

Republic Services said that it has established a $1.75 billion line of credit to meet the financing needs of its proposed combination with Allied Waste Industries, Inc. It also provides additional working capital and is an important step in the company's efforts to fend off Waste Management's unsolicited offer of $6.73 billion that management argues "substantially undervalues" the company. Republic expects to get the money under the new credit line when the Allied Waste deal closes, which is anticipated in the fourth quarter...Read More »



Waste Management Regroups to Consider Next Steps

Waste Management said it was disappointed with Republic Services rejection of its sweetened $6.7 billion, $37 per share, takeover offer and would evaluate options. The company could raise its offer, but must balance the extent to which it does so against the danger of losing investment grade status on its debt. Republic, which is trying to buy Allied Waste Industries also for $6.7 billion, argues that a deal with Waste Management involves significantly more regulatory risk and therefore would not be able to achieve the same synergies as the Allied deal. The recently filed Republic Services/Allied Waste proxy attributes higher value to that combination at up to $42 per share. One would also expect a premium for Republic's loss of control should it instead merge with Waste Management. Moreover, it is likely that Bill and Melinda Gates' investment arm BGI which is well on its way to owning 20% of Republic's shares, would continue to oppose a deal with Waste unless a higher price is named...Read More »



BFI Canada to Convert to Shares, Will Cut Payouts

BFI Canada Income Fund wants to convert its corporate structure from a trust to a dividend-paying corporation. In addition to reducing monthly payouts to investors by 73 percent, the move is expected to attract new investors, boost the value of its equity and allow it to expand beyond the limits allowed trusts by the government. The company said it was doing so in advance of a 2011 deadline set by the Canadian government. Certainly, the company does not want to miss out on the recent increase in acquisition activity in the US and potential opportunities that might arise from any required asset divestures resulting from a merger among the top three players there. According to Keith Carrigan, the fund's CEO, "Our ability to continue creating value within the trust structure is constrained as we cannot efficiently access capital to fund growth." Owners of the company, or unitholders, are scheduled to vote on the proposed change on Sept. 25. Once approved, the company's shares to be traded on the New York Stock Exchange...Read More »



Clean Energy Buys Third Largest Landfill Gas Operation

Clean Energy Fuels Corp. said it bought Dallas Clean Energy, the third largest landfill gas operation in the United States, for $19.1 million from U.K.-based Camco International Ltd. Dallas Clean Energy owns the McCommas Bluff landfill gas processing plant, which processes methane from the landfill owned by the city of Dallas. That landfill which opened in 1975 and is scheduled to close in 2042 is expected to produce pipeline-quality methane gas for another 30 years after the landfill closes. Andrew Littlefair, Clean Energy president and chief executive, called the deal a "major strategic action" for the company...Read More »



EPA Drafts Rule to Address Drugs in Water Supply

The EPA has completed a draft rule that would reclassify pharmaceuticals as "universal waste," a move it hopes will encourage the development of more take back programs, which in turn, should reduce water contamination. Under current Resource Conservation & Recovery Act (RCRA) regulations, many chemicals found in pharmaceuticals are subject to hazardous waste rules that set strict waste handling, record-keeping and personnel training requirements and demand drugs be incinerated. RCRA rules along with Drug Enforcement Administration rules on handling "controlled substances" and health insurance privacy requirements have so far hindered community take-back and recycling programs as an alternative to disposing of drugs in landfills or wastewater systems. Michigan and Florida have adopted similar rules to achieve the same ends...Read More »



Lafarge Will Use Synthetic Gypsum Recycled from Power Company

North American construction material giant Lafarge signed a long-term contract under which energy company Mirant Corp. will supply synthetic gypsum to its drywall manufacturing facility in Buchanan, NY. While ensuring cost-effective access to a critical raw material, it will also help Lafarge achieve 99% recycled content, an important step to attain LEED status for the construction of "green buildings" throughout the northeastern US. With the addition of the Buchanan plant, nearly all of the gypsum board manufactured by Lafarge in North America will be made with 100 percent recycled paper and recycled gypsum. Mirant will supply the synthetic gypsum which will be a by-product of sulfur dioxide removal from its power plants in Morgantown and Chalk Point, MD. It is part of their $1.6 billion investment in air pollution control technologies...Read More »


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