Weekly News Bulletin: Dec. 1-7, 2009


Barron's Reports: Waste Stocks Have Plenty of Room to Grow

Following on news last week that Warren Buffett bought 3.62 million shares, or 1%, of Republic Services, Barron's Magazine, in its Nov. 23 edition, quoted industry analysts who believe the waste management sector is poised for stock price gains, particularly if the economy rebounds. In addition to Buffet, Bill Gates, whose investment vehicle has built a 15% stake in Republic over the years, doubled his holdings in Waste Management to almost 16 million shares. "The billionaires are betting there's gold in trash, and they're probably on to something." The article points out that the top companies are well managed, cash flow generating enterprises sitting atop irreplaceable landfill assets while their shares are selling at a discount to the companies' estimated intrinsic value. According to Barron's, investor Todd Lowenstein of Highmark Value Momentum Fund sees Waste Management shares rising as high as $40 from their recent close of $32.30. Republic Services' Chairman Jim O'Connor has said that analysts' discounted cash-flow analysis pegs his company's value in the mid $30s range, according to the story. The article also highlights Waste Connections and notes that its third quarter profits grew by double digits while the company is buying back stock as well as purchasing assets that Republic has divested. Raymond James analyst William Fisher thinks that it could be worth $37.50 a year from now...Read More »



SPSA Rejects Suitors; Votes to Sell WTE Plant to Wheelabrator for $150 Million

The Southeastern Public Service Authority (SPSA) voted to sell its Portsmouth waste-to-energy plant to Wheelabrator Technologies for $150 million, and therefore, reject proposals from two companies to buy all of its assets. Wheelabrator, and ReEnergy Holdings LLC, had submitted competing proposals to purchase the authority's assets for about $240 million. That amount equals SPSA's outstanding debt accumulated over many years of mismanagement since its inception in 1978 to service the waste management needs of its eight member municipalities. In wrestling with its financial crisis, the authority had been studying the potential sale of the waste-to-energy plant for two years. At the same time, it has imposed almost draconian price increases at its landfill and transfer stations where fees are currently $170 per ton, among the highest in the country. Independent consultants had recommended the sale of the WTE plant to Wheelabrator alone owing to concerns about the complexity of a larger deal involving all of the authority's assets, the fact that ReEnergy's offer was contingent on selling tax exempt bonds and its ability to do so in the current economic environment...Read More »



Delaware Company to Open $20 Million Composting Operation

Peninsula Compost Co. (Wilmington, DE) is opening a $20 million high-volume food and mulch composting operation near the Port of Wilmington. Initially, they expect to take about 150 tons of food waste and organics per day but that would soon expand to about 500 tons per day or 160,000 tons per year. Blended woody and food wastes will decompose in long, narrow rows under a high-tech "Gore Cover" system that allows moisture and carbon dioxide to escape as waste breaks down into compost, while trapping odor-producing gases for removal and filtration...Read More »



Waste Management Opens New High-Tech Recycling Facility

Waste Management of Orange County, CA (WMOC) opened a new $1.7 million state-of-the-art recycling facility at its Irvine transfer station. It has been designed to process as much as 15 tons per hour of either commercial or residential recycling streams that will help the county divert more than 30,000 tons per year. It features many of the latest innovations including TiTech infrared optical sorting capabilities for the processing of dry recyclables, specialized OCC screens and sorting mechanisms including drum feeders.

The new processing facility is part of a larger environmental initiative that includes the deployment of solar-powered trash and recycling compactors, reverse vending machines called GreenOps Tracking Stations, food waste recycling machines, and adding lower emission collection vehicles to its fleet. The company is also helping its clients develop more sustainable business practices with its team of Green Squad eco-consultants...Read More »



EPA Delays Decision on Higher Ethanol Blend in Gas

The US EPA, in a letter to an industry group, put off until the middle of next year, any decision about whether to increase the allowable ethanol content in fuel. In a letter to Growth Energy, an ethanol lobby group, the agency said that more testing was necessary, but that some initial results indicate that raising the amount of ethanol blended into gasoline would be feasible for newer cars. Growth Energy wants to raise the maximum amount of ethanol to 15% from 10% currently allowed. In a press release, Growth Energy co-chairman Wesley K. Clark, the retired Army general and onetime presidential candidate, characterized EPA's letter as "basically a positive answer. It's a waypoint toward a decision that clearly foresees some future investments in ethanol." However, Bob Dinneen, chief executive of the Renewable Fuels Association, warned that the "delay threatens to paralyze the continued evolution of America's ethanol industry."...Read More »



EPA Weighs Options to Stimulate Recycling Rates

The US EPA is considering financial incentives to address the stagnation of municipal recycling rates including measures in the Senate climate change bill and assisting communities to adopt more sustainable funding mechanisms for their programs. Waste chief Mathy Stanislaus told attendees of the annual meeting of the Association of State & Territorial Solid Waste Management Officials (ASTSWMO) on Oct. 29 that he wants to explore ways to increase the national rate beyond its current level of 30 percent. Recycling has become a victim of its own success in that most urban areas are now served by programs with fewer areas in need of new programs. The recent recession hasn't helped either causing strains on municipal and state budgets that have forced officials to opt out of services considered non-essential, like recycling...Read More »



Stericycle Will Have to Shed Assets to Merge with MedServe

Medical waste services company Stericycle, Inc., which announced a deal to buy smaller rival MedServe in May, will have to sell some of MedServe's businesses to receive Justice Department approval. The agreement with the U.S. Department of Justice, as well as the states of Missouri and Nebraska clears the way for Stericycle to complete the deal by the end of this year. The company said it will pay MedServe $182.5 million instead of $185 million, and will sell a sterilization facility in Kansas, four transfer stations, and some large customer accounts and assets related to those facilities. The antitrust division and the attorneys general of Missouri and Nebraska had originally contested the sale on the theory that it would reduce competition leading to higher prices and reduced services in Kansas, Missouri, Nebraska, and Oklahoma. As part of the settlement, Stericycle agreed to notify the Justice Department and states of Missouri and Nebraska before it acquires any business involved in collecting and treating infectious waste in the four states...Read More »



Republic Services will Redeem $400 Million in 7.4% Notes Due 2014

Republic Services said it plans to redeem $400 million in 7.375 percent senior notes due in 2014 on Dec. 7. The company will redeem the notes for 103.688% of the principal amount plus unpaid interest and intends to use cash on hand and, if necessary, incremental borrowings under its revolving credit facility to fund the redemption. A charge of $46 million related to the redemption will be reflected in their fourth-quarter financials. Earlier this month, the company initiated a private offering of debt to raise as much as $680 million which it said would be used in part to refinance some of its more expensive debt...Read More »



Oakleaf Appoints New Chief Operating Officer

Waste services company OAKLEAF (Hartford, CT) appointed Santosh Rao as Chief Operating Officer (COO) of its largest subsidiary, OAKLEAF Waste Management. For the past five years, Rao has been the CEO and owner of Performance Systems Inc., a privately held manufacturer of racing superchargers, during which time the company more than doubled its sales. Current COO Aaron Furman rejoined OAKLEAF in May after retiring in 2007 to support the transition to a new CEO. Furman will remain active with the company on selected business initiatives...Read More »



EnergySolutions Appoints New Chief Financial Officer

Nuclear waste services company EnergySolutions Inc. (Salt Lake City) announced that its chief financial officer will resign at the end of the year. Philip O. Strawbridge, who helped with the company's initial public offering, will be replaced by Mark C. McBride, the company's current senior vice president and corporate controller. Strawbridge is resigning to "pursue personal business interests," the company said. EnergySolutions provides a variety of services the nuclear energy industry...Read More »


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