Casella Sells Maine Energy Recovery Company Property to City of Biddleford, with Waste Going to New Station

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Researched by Industrial Info Resources (Sugar Land, Texas)--The City Council of Biddeford voted in July of this year to buy the Maine Energy Recovery Company (MERC) property for $6.65 million from Casella Waste Systems Incorporated (NASDAQ:CWST) (Rutland, Vermont). Biddeford Mayor Alan Casavant said the MERC plant had caused the city to be called "Trashtown USA" and that the removal of the plant was going to mean a lot for the future of the city. "We're changing the paradigm, we're changing the stereotype and we're moving forward," he said.

It was reported recently that this purchase agreement would only allow Casella to continue the operation of the waste-to-energy incinerator until the end of this year. Further information from Casella shows that the terms are somewhat different from that which was reported: Casella says that the company plans to cease operations at MERC by the end of its third quarter of fiscal 2013, and at that time begin the process of dismantling the facility.

The deal was for $6.65 million over 21 years, and includes other provisions that have not received a lot of coverage: the city enters into two new 10 year agreements, one for waste handling and another for recycling collection. The sale covers the land on which the plant stands, but does not include above-grade improvements (other than the stack) and cellular leases related to antennae on the stack. The deal includes a post-sale transition period giving Casella the option to operate the facility for up to six more months. In addition, Casella has an additional year to dismantle all facilities on the property (except for the stack that houses the cellular equipment).

This deal does not mean the end of the relationship between Biddeford and Casella. Waste that was handled at the MERC will start going to a new transfer station in Westbrook.

"In September, we began construction of a new transfer station in Westbrook, Maine, to handle the majority of the waste currently disposed of at Maine Energy," said John W. Casella, chairman and CEO of Casella Waste Systems. "We expect to complete construction at Westbrook in late December, and to begin transferring waste historically directed to Maine Energy to other company landfills. The sale of Maine Energy is expected to materially improve our financial results, with consolidated adjusted EBITDA margins improving by roughly 70 basis points, and cash flows increasing by roughly $5.6 million per year due to lower capital expenditures."

Industrial Info will be tracking the plant from the time it ceases operations through dismantlement.

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