================================================================= COVANTA BANKRUPTCY NEWS Issue Number 1 ----------------------------------------------------------------- Copyright 2002 (ISSN XXXX-XXXX) April 2, 2002 ----------------------------------------------------------------- Bankruptcy Creditors' Service, Inc. 609-392-0900 FAX 609-392-0040 ----------------------------------------------------------------- COVANTA BANKRUPTCY NEWS is published by Bankruptcy Creditors' Service, Inc., 24 Perdicaris Place, Trenton, New Jersey 08618, on an ad hoc basis (generally every 10 to 20 days) as significant activity occurs in the Debtors' cases. New issues are prepared by Lyndsey Resnick, R. Vince Brandt and Peter A. Chapman, Editors. Subscription rate is US$45 per issue. Any re-mailing of COVANTA BANKRUPTCY NEWS is prohibited. ================================================================= IN THIS ISSUE ------------- [00000] HOW TO SUBSCRIBE TO COVANTA BANKRUPTCY NEWS [00001] BACKGROUND & DESCRIPTION OF COVANTA ENERGY CORPORATION [00002] CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 2001 [00003] COMPANY'S PRESS RELEASE ANNOUNCING CHAPTER 11 FILING [00004] COVANTA ENERGY CORPORATION CHAPTER 11 DATABASE [00005] LIST OF COVANTA'S 30-LARGEST UNSECURED CREDITORS [00006] LIST OF COVANTA'S 5-LARGEST SECURED CREDITORS [00007] DEBTORS' MOTION TO USE SECURED LENDERS' CASH COLLATERAL KEY DATE CALENDAR ----------------- 04/01/02 Voluntary Petition Date 04/16/02 Deadline for filing Schedules of Assets and Liabilities 04/16/02 Deadline for filing Statement of Financial Affairs 04/16/02 Deadline for filing Lists of Leases and Contracts 04/21/02 Deadline to provide Utilities with adequate assurance 05/31/02 Deadline to make decisions about lease dispositions 06/30/02 Deadline to remove actions pursuant to F.R.B.P. 9027 07/30/02 Expiration of Debtor's Exclusive Plan Proposal Period 09/28/02 Expiration of Debtor's Exclusive Solicitation Period 03/31/04 Deadline for Debtor's Commencement of Avoidance Actions Organizational Meeting with UST to form Committees Bar Date for filing Proofs of Claim First Meeting of Creditors pursuant to 11 USC Sec. 341 ----------------------------------------------------------------- [00000] HOW TO SUBSCRIBE TO COVANTA BANKRUPTCY NEWS ----------------------------------------------------------------- COVANTA BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtors' cases. The subscription rate is US$45 per issue. Newsletters are delivered via e-mail; invoices, transmitted following publication of each newsletter issue, arrive by fax. Re-mailing of COVANTA BANKRUPTCY NEWS is prohibited. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. To continue receiving COVANTA BANKRUPTCY NEWS, please complete the form below and return it by fax or e-mail to: Bankruptcy Creditors' Service, Inc. 24 Perdicaris Place Trenton, NJ 08618 Telephone (609) 392-0900 Fax (609) 392-0040 E-mail: peter@bankrupt.com We have published similar newsletters tracking billion-dollar insolvency proceedings since 1990, starting with Federated Department Stores. Currently, we provide similar coverage about the restructuring proceedings involving Safety-Kleen, Laidlaw, The IT Group, Enron Corp., Pacific Gas and Electric Company, Reliance Group Holdings & Reliance Financial, Global Crossing, McLoedUSA, Adelphia Business Solutions, Winstar, 360networks, ICG Communications, PSINet, Exodus Communications, Lernout & Hauspie & Dictaphone, NationsRent, ANC Rental, Burlington Industries, Chiquita Brands, Polaroid Corporation, Hayes Lemmerz, Federal- Mogul, W.R. 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Name: ---------------------------------------------- Firm: ---------------------------------------------- Address: ---------------------------------------------- ---------------------------------------------- Phone: ---------------------------------------------- Fax: ---------------------------------------------- E-Mail: ---------------------------------------------- (Distribution to multiple professionals at the same firm is provided at no additional cost.) COVANTA BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtor's cases. The subscription rate is US$45 per issue. Newsletters are delivered via e-mail; invoices, transmitted following publication of each newsletter issue, arrive by fax. Re-mailing of COVANTA BANKRUPTCY NEWS is prohibited. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. ----------------------------------------------------------------- [00001] BACKGROUND & DESCRIPTION OF COVANTA ENERGY CORPORATION ----------------------------------------------------------------- Covanta Energy Corporation 40 Lane Rd. Fairfield, NJ 07004 Telephone (973) 882-9000 http://www.covantaenergy.com Covanta Energy Corporation (NYSE:COV) is a publicly traded holding company whose subsidiaries develop, own or operate power generation facilities and water and wastewater facilities in the United States and abroad. Covanta owns or operates 62 power generation facilities, 46 of which are in the United States and 16 of which are located outside of the United States. Covanta's power generation facilities use a variety of fuels, including water (hydroelectric), natural gas, coal, geothermal fluid, municipal solid waste, wood waste, landfill gas, heavy fuel oil and diesel fuel. Covanta also offers single-source design, construction and operating capabilities for water and wastewater treatment facilities. Before March 14, 2001, Covanta was known as Ogden Corporation. Some of Covanta's affiliates continue to use the Ogden name. Covanta's energy business is divided into three categories: (A) Waste-to-Energy The waste-to-energy plants combust municipal solid waste and produce energy which is typically sold as electricity to utilities and other electricity purchasers. Covanta processes approximately 5% of the municipal solid waste produced in the United States and therefore represents a vital part of the solid waste disposal industry. (B) Independent Power Production Covanta's independent power production plants produce energy using water (hydroelectric), natural gas, coal, geothermal fluid, wood waste, landfill gas, heavy fuel oil and diesel oil. (C) Water and Wastewater Covanta's water and wastewater businesses, comprised of desalinization, waste water treatment and purification plants, are its newest businesses. Covanta's strategy in this market sector is similar to that which has been so successful in its waste-to-energy business-to create long-term partnerships with communities to design, build and operate infrastructures that are technically reliable and economically predictable. Energy's Where The Money Is Covanta's energy business is showing vibrant earnings and growth. In the first nine months of 2001, Covanta's energy business earned $111 million before interest and taxes, an increase of forty-eight percent from the $75 million earned in the first nine months of 2000. Exiting Entertainment and Aviation Until March 1999, and under prior management, Covanta was also actively involved in the entertainment and aviation services industries. Because of the diverse nature of Covanta's businesses, investors and analysts have historically found it difficult to value Covanta. As a result, Covanta's then-current management believed Covanta's stock price growth did not adequately reflect Covanta's financial results and prospects. In 1998, several of Covanta's shareholders urged Covanta to simplify its corporate structure by separating the energy business from the aviation and entertainment businesses. In March 1999, Covanta announced that it intended to explore ways to split its existing businesses. After six months of study and evaluation, Covanta determined that most of its earnings were generated by the energy business and that the focus on the entertainment and aviation businesses had not proven successful. Covanta concluded in September 1999 that a spin-off of the entertainment and aviation businesses was not feasible and announced instead that it would seek to sell the aviation and entertainment businesses outright. In September 1999, Covanta also announced that it was eliminating its quarterly dividend, terminating its stock buy- back program, and would be working with lenders to obtain covenant waivers to facilitate the sale of the aviation and entertainment businesses. At the same time, Covanta's former CEO resigned and was replaced by the current CEO, Scott G. Mackin, who had been President of the energy business. Covanta has completed most of its plan to sell its entertainment and aviation businesses. The principal entertainment and aviation assets that remain unsold are: (1) the businesses associated with: -- the Arrowhead Pond Arena in Anaheim, California, -- the Corel Centre in Ottawa, Canada and -- the Ottawa Senators hockey team; (2) Covanta's assets in Argentina related to a casino and an exhibition center; and (3) the aviation fueling and fuel facility management businesses related to the Port Authority of New York and New Jersey's three airports. Both the fueling business with respect to the Port Authority and the casino in Argentina are under contract for sale. Negotiations with the Lenders In March 2000, while it was working to sell its aviation and entertainment assets, Covanta also began negotiating with its lenders. At that time, Covanta had approximately $140 million of funded debt owed to its bank group, as well as exposure to significant additional contingent liabilities arising from outstanding letters of credit. In March 2001, Covanta completed negotiations with its lenders, paid the funded debt in full, and executed a Revolving Credit and Participation Agreement. Covanta planned thereafter to seek debt or equity financing from the capital markets and to complete the sales of the remaining entertainment and aviation businesses. CIRCUMSTANCES PRECIPITATING CHAPTER 11 FILINGS The California Energy Crisis Shortly after the Credit Agreement was executed, the State of California's energy crisis escalated. As of March 31, 2001, Covanta had outstanding approximately $74 million of gross accounts receivable from the California electric utilities, including Pacific Gas & Electric Company, which filed for bankruptcy on April 6, 2001. In addition, in mid-summer 2001, there was a growing belief that the power industry was substantially overbuilt, that demand for new facilities would drop and that energy prices would erode, as evidenced by a widely read article in Barron's published in August 2001. These factors, along with reductions in energy prices in various regions of the United States, contributed to a downturn in the market for new issues of energy company securities. September 11 The disaster of September 11, 2001, which affected the United States so deeply, also had a negative affect on Covanta's ability to complete its planned access to the capital markets and its ability to complete certain aspects of its asset disposition program. The market to sell entertainment assets in the United States and Canada diminished as event attendance dropped. The sale of a portion of Covanta's aviation business was interrupted because that business is conducted with the Port Authority, which was located in the World Trade Center in New York City. After September 11, the Port Authority employees with responsibility for approving the sale of the aviation business were unable to continue work on the proposed transaction. At the same time, it also became significantly more difficult to sell businesses related to the aviation industry, as airlines drastically cut back on flights and services. The market for energy stocks, which had begun to deteriorate as a result of the California energy crisis, was further dampened by the September 11 events. Argentina Also, severe economic turmoil in Argentina impacted Covanta's ability to dispose of its Argentine casino and exhibition hall. Investment Bankers Hired Covanta considered a new plan to preserve its value, either through refinancing in a private transaction or by selling the entire company, with its strong energy business at the core. To that end, in September 2001, Covanta engaged investment bankers and began to compile information necessary for a refinancing or sale. Enron Collapses On December 2, 2001, Enron Corporation, at the time the largest energy company in the United States in terms of market capitalization, filed for bankruptcy. The Enron bankruptcy, although caused by very different factors than those impacting Covanta, had an inhibiting effect on the credit and equity markets for energy companies. Exploring Strategic Alternatives On December 21, 2001, Covanta announced that it was exploring all of its strategic options. These options included, without limitation, potential equity investment in the company. As of the Petition Date, these discussions continue. In December 2001 and January 2002, Covanta requested covenant waivers under the Credit Agreement from its lenders as well as access to short term liquidity. The lenders provided waivers through March 31, 2002 pursuant to a series of amendments to the Credit Agreement. On December 27, 2001, Moody's Investors Service downgraded Covanta's credit rating, noting the delay in selling the aviation and entertainment assets, the delays in collecting the California utility receivables as well as Covanta's inability to meet cash flow covenants under the Credit Agreement. Moody's Investors Service further downgraded Covanta on January 11, 2002 and on January 16, 2002, Standard & Poor's also downgraded Covanta's credit rating. On January 30, 2002, February 28, 2002, and again on March 1, 2002, Fitch Ratings downgraded $650 million of solid waste project bonds issued by non-Debtor entities to fund the construction of waste-to-energy projects. On March 1, 2002, both Standard & Poor's and Moody's Investors Service further downgraded Covanta. Where It's At Today Covanta currently has approximately $570 million of outstanding letters of credit and put obligations. Of that amount, $153 million relates to entertainment and aviation assets from which Covanta derives little or no cash flow and of which Covanta has been unable to dispose. The Straw That Broke The Camel's Back On March 14 and 15, 2002, approximately $20 million in fees under the Credit Agreement were due but were not paid. These fees cannot be paid without violating cash maintenance covenants under the Credit Agreement. In addition, draw notices, totaling approximately $105 million, recently were presented on two letters of credit issued on behalf of Covanta in relation to one of Covanta's entertainment assets. The letters of credit, which were issued under the Credit Agreement, have been honored by Covanta's lenders. Because Covanta has insufficient liquidity, it has been unable to reimburse these lenders for the drawn letters of credit and outstanding fees in accordance with the Credit Agreement. Covanta faces in 2002 the maturity of approximately $150 million in convertible debentures and a claim for $45 million in federal and state taxes. Covanta also owes additional debt in the amount of $100 million of 9.25% debentures due in 2022. Covanta recently availed itself of the 30-day grace period provided under the terms of its 9.25% debentures and did not make an interest payment due on March 1, 2002. KKR Brings an Offer to the Table On March 31, 2002, Covanta entered into a non-binding Letter of Intent with an affiliate of the investment firm of Kohlberg Kravis Roberts & Co. in contemplation of a $225 million equity investment under which a KKR affiliate would acquire the company upon emergence from chapter 11 bankruptcy and upon the satisfaction of certain conditions. The Letter of Intent provides that Covanta and its postpetition lenders will work with KKR for up to 90 days in pursuit of the transaction. Where It's Going From Here "Covanta," Jeffrey R. Horowitz, Covanta's Senior Vice President for Legal Affairs, says, "now stands at a crossroads. The cumulative effect of the delay in payments of outstanding receivables due from the California utilities, the disaster of September 11, Covanta's inability to divest in a timely manner all of its non-energy assets, Enron's bankruptcy and liquidity issues have effectively closed down the capital markets for Covanta and made it virtually impossible to accomplish an informal, out-of-court, restructuring of its assets. Therefore, to maximize its flexibility, Covanta is seeking protection under Chapter 11 of the Bankruptcy Code to provide Covanta with much needed time to finalize the sales of its entertainment and aviation businesses, to seek acceptable arrangements with its creditors, to refocus and reorganize around its strong core energy and water businesses and to pursue a potential equity investment as contemplated by the Letter of Intent." ----------------------------------------------------------------- [00002] CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 2001 ----------------------------------------------------------------- COVANTA ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS At September 30, 2001 ASSETS Current Assets: Cash and cash equivalents $61,271,000 Restricted funds held in trust 132,606,000 Receivables (less $28,390,000 allowances) 273,419,000 Deferred income taxes 43,509,000 Prepaid expenses and other current assets 98,313,000 Net assets held for sale 76,989,000 -------------- Total current assets 686,107,000 Property, plant and equipment - net 1,925,312,000 Restricted funds held in trust 155,607,000 Unbilled service and other receivables 157,953,000 Unamortized contract acquisition costs 84,001,000 Goodwill and other intangible assets 17,531,000 Investments in and advances to investees and joint ventures 187,562,000 Other assets 66,305,000 -------------- Total Assets $3,280,378,000 ============== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Current Liabilities: Current portion of long-term debt $36,717,000 Current portion of project debt 105,766,000 Current portion of convertible subordinated debentures 85,000,000 Accounts payable 40,417,000 Federal and foreign income taxes payable 432,000 Accrued expenses, etc. 342,794,000 Deferred income 43,333,000 -------------- Total current liabilities 654,459,000 Long-term debt 277,370,000 Project debt 1,350,427,000 Deferred income taxes 334,748,000 Deferred income 164,944,000 Other liabilities 147,413,000 Minority interests 38,451,000 Convertible subordinated debentures 63,650,000 -------------- Total Liabilities 3,031,462,000 -------------- Shareholders' Equity: Serial cumulative convertible preferred stock, par value $1.00 per share; authorized, 4,000,000 shares; shares outstanding: 34,810, net of 29,820 treasury shares 35,000 Common Stock, par value $.50 per share; authorized, 80,000,000 shares; shares outstanding: 49,827,129, net of 4,111,950 treasury shares 24,914,000 Capital surplus 188,374,000 Notes receivable from key employees for common stock issuance (1,049,000) Unearned restricted stock compensation (855,000) Earned surplus 43,491,000 Accumulated other comprehensive loss (5,994,000) -------------- Total Shareholders' Equity 248,916,000 -------------- Total Liabilities and Shareholders' Equity $3,280,378,000 ============== ----------------------------------------------------------------- [00003] COMPANY'S PRESS RELEASE ANNOUNCING CHAPTER 11 FILING ----------------------------------------------------------------- Covanta Announces Financial Restructuring Resulting From Strategic Review Company Files Voluntary Chapter 11 Petition KKR Intends to Provide $225 Million in Equity Financing $463 Million Debtor-in-Possession Financing Arranged Announces Program to Focus on Core Energy and Water Operations FAIRFIELD, New Jersey -- April 1, 2002 -- Covanta Energy Corporation (NYSE: COV) today announced a financial restructuring plan resulting from its comprehensive review of strategic alternatives. As the first element of that plan, the Company has filed a voluntary petition for Chapter 11 reorganization with the U.S. Bankruptcy Court in the Southern District of New York. The Company's core energy and water facilities will continue to operate in the normal course of business and will be unaffected by the filing. Results of Strategic Review Today's announcement represents the culmination of the strategic review conducted by the Company's Board and management, with outside financial advisers, which was announced in December 2001. As a result of that review, the Company: -- Determined that reorganization under Chapter 11 represents the most viable venue to reorganize the Company's capital structure, complete the disposition of its remaining non-core entertainment and aviation assets, and protect the value of the Energy and Water franchise; -- Entered into a non-binding Letter of Intent with the investment firm of Kohlberg Kravis Roberts & Co. (KKR) for a $225 million equity investment under which a KKR affiliate would acquire the Company upon emergence from Chapter 11; and -- Announced a strategic restructuring program to focus on the U.S. energy and water market, expedite the disposition of non-core assets and, as a result, reduce overhead costs. In connection with the filing, Covanta obtained a commitment for $463 million of debtor-in-possession (D-I-P) financing from its current bank group. This financing, subject to approval by the Bankruptcy Court, will cover all of the Company's ongoing cash needs and help ensure the continuation of the Company's Letters of Credit, which are used to support the performance and payment obligations of its core energy and water facilities. Scott G. Mackin, Covanta President and Chief Executive Officer, stated, "We have painstakingly reviewed and pursued all options outside of a Chapter 11 filing for quite some time now. Our core businesses - Waste to Energy, Independent Power Production and Water - are strong. However, the capital structure impediments left over from the non-core, former Ogden Corporation businesses, and the lack of access to the capital markets as means by which to deal with them, have foreclosed other options. The exhaustive strategic review has demonstrated that Chapter 11 represents the most viable venue for Covanta to address those capital structure issues, expedite our restructuring and preserve the value of our strong core businesses. When we emerge, we will do so with a strong balance sheet and core businesses unencumbered by the problems we inherited. "We are gratified by the support of our bank group and KKR, which we believe will allow us to complete the Chapter 11 process expeditiously. Our bank group, particularly the Agents, has worked exceptionally hard to put together an impressive D-I-P facility that will preserve our core businesses through this process. And, the relationship we have formed with KKR over the past several months is particularly exciting. Their expertise, business acumen and financial resources will add significant value to Covanta's prospects, and their potential investment affirms the strength of our core energy and water operations. "We are working to obtain court approval of the substantial D-I-P package quickly, but in the meantime, interim approval affords us access to ample cash with which we will continue to operate our energy and water facilities as usual. At this time, the Company has in excess of $55 million in its domestic accounts. We intend to pay in full our post-petition obligations, including payments to vendors. With our bank group and KKR, we look forward to working with our creditors to develop a Plan of Reorganization that is fair and feasible and positions us to realize the full potential of our core businesses," Mr. Mackin said. $225 Million Equity Investment by KKR The non-binding Letter of Intent with KKR provides that the Company and the Agents for its bank group will work exclusively with KKR for up to 90 days. Upon completion of due diligence, the negotiation and execution of definitive agreements satisfactory to the Company, KKR, the bank group and other creditors, the confirmation of a Plan of Reorganization by the Court and the satisfaction of other conditions, KKR would acquire the Company upon its emergence from Chapter 11. The Agents of the bank group providing the Company's D-I-P financing have signed the Letter of Intent and support a transaction with KKR. The rights of Covanta's creditors would be determined as part of the Plan of Reorganization. Existing common equity and preferred shareholders are not expected to participate in the new capital structure. Scott Stuart, Member of KKR, said, "KKR has been working closely with Covanta's management team for several months to determine the Company's optimal course for the future. We are pleased that the Company has elected to partner with us after its lengthy strategic review process. While this is an extremely complex situation given the particular challenges of the Company's capital structure, we are attracted to Covanta's core assets and strong management team. We look forward to continuing to work closely with the Company, the bank group and other creditors to implement a Plan of Reorganization that will best meet Covanta's objectives now and over the long term." $463 Million Debtor-in-Possession Financing Arranged by Existing Bank Group The filing immediately enhanced Covanta's liquidity by enabling the Company to restructure liabilities associated with its non-core entertainment and aviation businesses. Moreover, the Company has obtained a commitment for $463 million in debtor-in- possession (D-I-P) financing from its bank group, led by the Agents. This financing, which is subject to definitive court approval, will cover all of the Company's ongoing cash needs and helps ensure the continuation of the Company's Letters of Credit that support the performance and payment obligations of our core energy and water facilities. Restructuring Program to Focus on Its Core Energy and Water Business Covanta also announced a restructuring program to focus on the U.S. energy and water industry, expedite the disposition of its non-core assets and, thereby reduce overhead costs. Further, the Company announced that it has completed the sale of its Thai energy assets for $35 million to two consortia of co-investors. The sales included Covanta's Saha and Rojana co- generation facilities, as well as its subsidiary operating those plants. Core Energy, Water Facilities Conducting Business in Ordinary Course Covanta will continue to conduct business at its core energy and water facilities. The Chapter 11 filing will have no effect on their operation, and the Company intends to continue operating those facilities according to the same high standards as always. "Continued performance to our loyal customers, client communities, partners and vendors is our paramount focus," said Mr. Mackin. "We value those relationships and are committed to maintaining the same levels of service and performance that they have come to expect from us. In particular, we are grateful to the many clients who have gone out of their way to voice their support for us as we go through this process. "We will become predominately a domestic energy and water business allowing us to more efficiently focus our resources on the current operations and the expansion opportunities available to us in the U.S. The Chapter 11 process along with KKR's continuing involvement will give us the ability to efficiently accomplish this self-help program which we will begin immediately." The Company's project debt is unaffected by the Chapter 11 filing. Project bondholders should expect that all debt service payments will continue. In fact, because Chapter 11 protects the value of the Company's core energy assets, the filing will help ensure the projects' continued performance and associated project debt payments. The Company intends to maintain its qualified benefits programs for employees and to continue the current payroll schedule. "The foundation of Covanta is its employees," Mr. Mackin concluded. "Their effort and dedication, particularly over the last two years, have put us in a position to build on our core franchise to further strengthen the Company and enhance its prospects for the future. We are grateful for their ongoing support." Covanta Energy Corporation is an internationally recognized designer, developer, owner and operator of power generation projects and provider of related infrastructure services. The Company's independent power business develops, structures, owns, operates and maintains projects that generate power for sale to utilities and industrial users worldwide. Its waste-to-energy facilities convert municipal solid waste into energy for numerous communities, predominantly in the United States. The Company also offers single-source design/build/operate capabilities for water and wastewater treatment infrastructures. Additional information about Covanta can be obtained via the Internet at http://www.covantaenergy.com, or through the Company's automated information system at 866-COVANTA (268-2682). ----------------------------------------------------------------- [00004] COVANTA ENERGY CORPORATION CHAPTER 11 DATABASE ----------------------------------------------------------------- Debtor entities filing separate chapter 11 petitions: Case No. Debtor Entity -------- ------------- 02-40826 Ogden New York Services, Inc. 02-40827 Ogden Allied Abatement & Decontamination Service, 02-40828 Ogden Allied Maintenance Corporation 02-40829 Ogden Aviation Distributing Corp. 02-40830 Ogden Aviation Service International Corp. 02-40831 LaGuardia Fuel Facilities Corp. 02-40832 Lenzar Electro-Optics, Inc. 02-40833 Newark Automotive Fuel Facilities Corp. 02-40834 Ogden Aviation Service Company of Pennsylvania, In 02-40835 Ogden Allied Payroll Services, Inc. 02-40836 Ogden Attractions, Inc. 02-40837 Ogden Aviation Fueling Company of Virginia, Inc. 02-40838 Ogden Aviation, Inc. 02-40839 Ogden Aviation Service Co. of Colorado, Inc. 02-40840 Ogden Aviation Service Company of New Jersey, Inc. 02-40841 Covanta Energy Corporation 02-40842 Ogden Aviation Service Company of New York, Inc. 02-40843 Ogden Cargo Spain, Inc. 02-40844 Ogden Central and South America, Inc. 02-40845 Ogden Facility Holdings, Inc. 02-40846 Ogden Facility Management Corp. of Anaheim 02-40847 Ogden Film and Theatre, Inc. 02-40848 Ogden Firehole Entertainment Corporation 02-40849 Ogden International Europe, Inc. 02-40850 Ogden Services Corporation 02-40851 Ogden Support Services, Inc. 02-40852 PA Aviation Fuel Holdings, Inc. 02-40853 Philadelphia Fuel Facilities Corporation 02-40854 Covanta Energy Sao Jeronimo, Inc. 02-40855 Covanta Power Development, Inc. 02-40856 Covanta Power Development of Bolivia, Inc. 02-40857 J.R. Jack's Construction Corporation 02-40858 Ogden Constructors, Inc. 02-40859 Ogden Environmental and Energy Services Company, I 02-40860 OPI Quezon, Inc. 02-40861 Covanta Acquisition, Inc. 02-40862 Covanta Bessemer, Inc. 02-40863 Covanta Cunningham Environmental Support Services, 02-40864 Covanta Key Largo, Inc. 02-40865 Covanta Tampa Bay, Inc. 02-40866 Covanta Water Holdings, Inc. 02-40867 Covanta Water Systems, Inc. 02-40868 Covanta Water Treatment Services, Inc. 02-40869 DSS Environmental, Inc. 02-40870 Covanta Energy Construction 02-40871 Covanta Energy West, Inc. 02-40872 Covanta Geothermal Operations, Inc. 02-40873 Covanta Geothermal Operations Holdings, Inc. 02-40874 Covanta Hydro-Operations, Inc. 02-40875 Covanta Hydro Operations West, Inc. 02-40876 Covanta Imperial Power Services, Inc. 02-40877 Covanta New Martinsville Hydro-Operations Corporat 02-40878 Covanta Oil and Gas, Inc. 02-40879 Three Mountain Operations, Inc. 02-40880 Three Mountain Power LLC 02-40881 Covanta Energy Americas, Inc. 02-40882 Second Imperial Geothermal Company, L.P. 02-40883 Covanta SIGC Geothermal Operations, Inc. 02-40884 Covanta SIGC Energy II, Inc. 02-40885 Covanta SIGC Energy, Inc. 02-40886 Amor 14 Corporation 02-40887 Herber Geothermal Company 02-40888 Heber Field Company 02-40889 Heber Loan Partners 02-40890 ERC Energy II, Inc. 02-40891 ERC Energy, Inc. 02-40892 Heber Field Energy II, Inc. 02-40893 Covanta Heber Field Energy, Inc. 02-40894 Covanta Hydro Energy, Inc. 02-40895 Covanta Power Equity Corporation 02-40896 Covanta Secure Services USA, Inc. 02-40897 Covanta Waste Solutions, Inc. 02-40898 Covanta Engineering Services, Inc. 02-40899 Covanta Energy Services, Inc. 02-40900 Covanta Energy Services of New Jersey, Inc. 02-40901 Covanta Secure Services, Inc. 02-40902 Covanta Waste to Energy of Italy, Inc. 02-40903 Covanta Projects of Wallingford, L.P. 02-40904 Covanta Warren Energy Resource Co., Limited Partne 02-40905 Covanta Honolulu Recovery Venture 02-40906 Covanta Hennepin Energy Resource Co., Limited Part 02-40907 Covanta OPWH, Inc. 02-40908 Covanta OPW Associates, Inc. 02-40909 Covanta Operations of Union LLC 02-40910 Covanta RRS Holdings, Inc. 02-40911 Covanta Mid-Conn, Inc. 02-40912 Covanta Oahu Waste Energy Recovery, Inc. 02-40913 Covanta Projects of Hawaii, Inc. 02-40914 Covanta Wallingford Associates, Inc. 02-40915 Covanta Energy Resource Corporation 02-40916 Covanta Huntington Limited Partnership 02-40917 Covanta Long Island, Inc. 02-40918 Covanta Huntington, Inc. 02-40919 Covanta Huntington Resource Recovery One Corp. 02-40920 Covanta Huntington Resource Recovery Seven Corp. 02-40921 Covanta Onondaga Limited Partnership 02-40922 Covanta Onondaga, Inc. 02-40923 Covanta Onondaga Two Corp. 02-40924 Covanta Onondaga Three Corp. 02-40925 Covanta Onondaga Four Corp. 02-40926 Covanta Onondaga Five Corp. 02-40927 Covanta Onondaga Operations, Inc. 02-40928 Covanta Babylon, Inc. 02-40929 Covanta Alexandria/Arlington, Inc. 02-40930 Covanta Bristol, Inc. 02-40931 Covanta Fairfax, Inc. 02-40932 Covanta Hillsborough, Inc. 02-40933 Covanta Huntsville, Inc. 02-40934 Covanta Indianapolis, Inc. 02-40935 Covanta Kent, Inc. 02-40936 Covanta Lake, Inc. 02-40937 Covanta Lancaster, Inc. 02-40938 Covanta Lee, Inc. 02-40939 Covanta Marion, Inc. 02-40940 Covanta Marion Land Corp. 02-40941 Covanta Montgomery, Inc. 02-40942 Covanta Northwest Puerto Rico, Inc. 02-40943 Covanta Pasco, Inc. 02-40944 Covanta Stanislaus, Inc. 02-40945 Covanta Tulsa, Inc. 02-40946 Covanta Union, Inc. 02-40947 Covanta Financial Services, Inc. 02-40948 Covanta Systems, Inc. 02-40949 Covanta Waste to Energy, Inc. Petition Date: April 1, 2002 U.S. Bankruptcy Court: United States Bankruptcy Court Southern District of New York Alexander Hamilton Custom House One Bowling Green, 5th Floor New York, New York 10004-1408 Telephone (212) 668-2870 Bankruptcy Judge: The Honorable Cornelius Blackshear Debtors' Bankruptcy Counsel: Deborah M. Buell, Esq. James L. Bromley, Esq. CLEARY, GOTTLIEB, STEEN & HAMILTON One Liberty Plaza New York, New York 10006 Telephone (212) 225-2000 Debtors' Special Litigation Counsel: Vincent E. Lazar, Esq. Richard T. Franch, Esq. JENNER & BLOCK LLC One IBM Plaza Chicago, IL 60611 Telephone (312) 222-9350 Fax (312) 527-0484 Debtors' Regulatory & Corporate Counsel: Jeffrey W. Meyers, Esq. LEBOEUF, LAMB, GREENE & MACRAE LLP 125 West 55th Street New York, New York 10019 Debtors' Special Transaction Counsel: Edward C. Sledge, Esq. HOGAN & HARTSON L.L.P. 555 13th Street NW Washington, D.C. 20004-1109 Debtors' Restructuring Advisor: Moshin Y. Meghji James Loughlin LOUGHLIN MEGHJI + COMPANY 420 Lexington Ave., Suite 300 New York, NY 10170 (212) 297-6267 U.S. Trustee: Carolyn S. Schwartz United States Trustee for Region 2 33 Whitehall Street, Suite 2100 New York, NY 10004 Telephone (212) 510-0500 Members of the Ad Hoc Committee of 9.25% Debentureholders: Ameritas Life Insurance Company CalPERS Goldman Sachs Metropolitan Life Insurance Company Presidential Life Insurance Company Sagamore Hill Societe Generale Stonehill Capital Management WM Advisors Counsel to the Ad Hoc Committee of 9.25% Debentureholders: Fred S. Hodara, Esq. Akin, Gump, Strauss, Hauer & Feld, L.L.P. 590 Madison Avenue New York, New York 10022 ----------------------------------------------------------------- [00005] LIST OF COVANTA'S 30-LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Creditor Nature of Claim Claim Amount -------- --------------- ------------ Deutsche Bank 6% Convertible $85,000,000 (f/k/a Bankers Trust Company) Debentures 100 Plaza One Jersey City, NJ 07311 (as Fiscal Agent for Issuer) Attn: Rodney Gaughen Ph: (201) 593-6857 Deutsche Bank 5-3/4% $63,650,000 (f/k/a Bankers Trust Company) Convertible 100 Plaza One Debentures Jersey City, NJ 07311 (as Fiscal Agent for Issuer) Attn: Rodney Gaughen Ph: (201) 593-6857 Sempra Energy Promissory Note $8,170,663 101 Ash Street San Diego, CA 92101 Attn: Tony Molnar Ph: (619) 696-4521 Fax: (619) 696-4899 GE Power Generation Trade Payables $4,693,200 1 River Road Building 2-414 Schenectady, NY 12345 Attn: Carlos Llera Ph: (410) 737-7251 Citibank, N.A. Letter of Credit $3,910,000 388 Greenwich Street related to New York, NY 10013 Bangladesh Attn: Ruth Irwin facility Citibank, N.A. 388 Greenwich Street, 20th Fl. New York, NY 10013 Ph: (212) 816-9871 Broad Street Resources, Inc. Trade Payables $2,548,200 154 King Street Charleston, SC 29401 Broad Street Resources, Inc. 154 King Street Charleston, SC 29401 Donna Yarnell, Tax Assessor Trade Payables $697,214 940 West Main Street, Room 106 El Centro, CA 92243-2864 Ph: (760) 482-4301 Welding Services, Inc. Trade Payables $440,271 2225 Skyland Ct. Norcross, GA 30071 Attn: Gary Dixon Ph: (770) 449-1706 Fax: (770) 449-4684 County of Fairfax Trade Payables $435,870 Division of Solid Waste Disposal & Resource Recovery 1200 Government Center Parkway, Suite 463 Fairfax, VA 22035 Attn: Joyce M. Doughty Ph: (703) 324-5040 Fax: (703) 802-5949 Boiler Tube Co. of America Trade Payables $403,437 506 Charlotte Highway Lyman, SC 29365 Attn: Mary Redden Ph: (800) 845-3052 Fax: (864)439-8283 PwC Securities LLC Trade Payables $360,000 1177 Avenue of the Americas, 19th Floor New York, NY 10036 Attn: Brain Womser Ph: (646) 471-4904 Fax: (646) 471-4901 Four Flint Hill Trade Payables $275,769 Limited Partnership 11501 Huff Court North Bethesda, MD 20895-1094 Rita Fraad Trade Payables $262,083 17 Oxford Rd. Scardale, NY 10583 Chemtreat, Inc. Trade Payables $259,578 4301 Dominion Blvd. Glen Allen, VA 23060 Attn: John Nygren, President Ph: (804) 935-2000 Calgon Carbon Corp. Trade Payables $230,839 500 Calgon Carbon Dr. Pittsburgh, PA 15205 Attn: Jim Cederna, President Ph: (412) 787-6700 Tanner Industries, Inc. Trade Payables $227,230 735 Dansville Road Southhampton, PA 18966 Attn: Brad Tanner, President Ph: (215) 322-1235 Gary W. Gray Trucking Inc. Trade Payables $221,352 56 Route 46 Delaware, NJ 07833 Attn: Gary Gray, President Ph: (908) 475-3797 Fax: (908) 475-3243 Thomason Mechanical Corp. Trade Payables $214,572 19002 S. Santa Fe Avenue Rancho Dominguez, CA 90221 Attn: Alex Koualett Ph: (213) 639-3523 Fax: (213) 639-8217 Kvaerner Pulping, Inc. Trade Payables $195,211 25 Rodeo Drive Fairmont, WV 26554 Attn: Charlie Parker/Karen Yost Neil Papiano Trade Payables $190,000 Iverson, Yoakum, Papiano & Hatch 624 S. Grand Ave. 27th Floor Los Angeles, CA 90017 Attn: Neil Papiano Ph: (213) 624-7444 Fax: (213) 626-6977 Wheelabrator Millbury, Inc. Trade Payables $185,694 331 Southwest Cutoff Rd. Spokane, WA 01527 Attn: Chuck Conklin Ph: (509) 624-6269 Fax: (509) 624-6269 Commissioner of Revenue Service Trade Payables $169,230 25 Sigourney St. Hartford, CT 06106 Attn: Tony Massa Ph: (860) 297-5650 Dravo Lime Company Trade Payables $169,215 599 High Street Saginaw, AL 35217 Ph: (205) 664-7111 Fax: (205) 663-1030 Graymont (PA) Inc. Trade Payables $155,665 North Thomas Street Bellefonte, PA 16823 Attn: Paul Gory North American Industrial Trade Payables $144,245 Services 1240 Saratoga Road Ballston Spa, NY 12020 Ph: (518) 885-1820 Fax: (518) 885-7638 Oliva Development LLC Trade Payables $139,500 7037 Fly Rd. E. Syracuse, NY 13057 Attn: Steve Oliva, President Ph: (315) 463-8684 Higgins Sales & Service Trade Payables $139,336 3101-H 103 Guess Road Durham, NC 27705 Attn: John Kenlan Ph: (919) 479-5536 Fax: (919) 620-0935 Zampell Refractories, Inc. Trade Payables $135,772 3 Stanley Tucker Drive Newbury Port, MA 01950 Attn: Dian Santos Ph: (978) 465-0055 Fax: (978) 465-0125 Techalloy Company, Inc. Trade Payables $135,365 Welding Division 2310 Chesapeake Ave. Baltimore, MD 21222-4098 Attn: Charlie Bucks Ph: (410) 633-8033 General Dynamics OTS, Inc. Trade Payables $132,038 11441 Willows Rd NE Redmond, WA 98052-2501 Ph: (425) 882-5784 Fax: (425) 882-5747 ----------------------------------------------------------------- [00006] LIST OF COVANTA'S 5-LARGEST SECURED CREDITORS ----------------------------------------------------------------- Creditor Nature of Claim Claim Amount -------- --------------- ------------ Bank of America (co-agent) Master Credit $488,349,931 6610 Rockledge Drive Facility Bethesda, MD 20817-1876 - and - Deutsche Bank (co-agent) 100 Plaza One Jersey City, NJ 07311 Credit Suisse First Boston Intercreditor $117,151,000 11 Madison Avenue Agreement and New York, NY 10010-3629 Bank Agreement related to Anaheim COPs project, dated December 1,1993 Wells Fargo Corporate 9-1/4% $100,000,000 Trust Services Debentures Sixth and Marquette Minneapolis, MN 55479 Canadian Imperial Bank of Intercreditor $47,520,000 Commerce Agreement and Corporate Finance Group Put Agreement 161 Bay Street, 8th Floor (Class B DPS), BCE Place dated December Toronto, Ontario M5J 2S8 22, 1997 GE Capital Services Hennepin Capital $28,423,471 Structured Finance Group Lease 120 Long Ridge Road Stamford, CT 06927 Attn: Anthony Ligato, VP ----------------------------------------------------------------- [00007] DEBTORS' MOTION TO USE SECURED LENDERS' CASH COLLATERAL ----------------------------------------------------------------- Four groups of Secured Lenders purport to hold prepetition claims secured by assets or revenues of one or more Debtor entities: (A) The WTE Trustees The Company and certain Subsidiaries operate, and in some cases own, energy-generating projects fueled by municipal solid waste, and providing long-term services from these WTE Projects to the communities in which they are located. In connection with these WTE Projects, the Company, the applicable Subsidiaries and certain third parties have entered into agreements concerning the design, construction, operation, maintenance and financing of the WTE Projects, which collectively form the contractual base on which each of the WTE Projects was financed, and upon which the project-related cash flows are handled. There are 24 WTE Projects among the Debtor entities, all of which were financed by bond issuances by non-Debtor entities unaffiliated with the Debtors. Under the relevant WTE Agreements, some or all of the WTE Project assets or revenues are pledged as security to the WTE Trustees. Accordingly, the WTE Trustees generally have a security interest in the project cash, including any Operating Fees, pass-through costs, share of energy revenues, surplus funds and other amounts payable to the Debtors. The Operating Fee is disbursed, typically on a monthly basis, and by the WTE Trustee, to the Company and its Operating Subsidiaries. In 16 of the 24 WTE Projects, the Company and one or more Subsidiaries own or lease the facility and have pledged assets and revenues of the WTE Projects to the WTE Trustee to secure another party's repayment of the bonds: WTE Project Debtor Subsidiary WTE Trustee ----------- ----------------- ----------- Alexandria/ Covanta SunTrust Bank, Inc. Arlington, VA Alexandria/Arlington, Mail Code: HDQ 5310 Inc. 919 East Main Street Richmond, VA 23219 Fax: 804-782-7855 Amount Owed: $44,350,000 (Series A) Amount Owed: $42,755,000 (Series B) Babylon, NY Covanta Babylon, Inc. JPMorgan Chase Institutional Trust Services 450 West 33rd Street, 15th Floor New York, NY 10001 Fax: 212-946-8160 Amount Owed: $91,532,070 Bristol, CT Covanta Bristol, Inc. State Street Bank and Trust Company Corporate Trust Goodwin Square 225 Asylum Street, 23rd Floor Hartford, CT 06103 Attn: Mark Forgetta Ph: 860-244-1837 Fax: 860-244-1884 Amount Owed: $55,865,000 Fairfax, VA Covanta Fairfax, Inc. First Union National Bank Corporate Trust Dept. 800 E. Main Street, Lower Mezzanine Richmond, VA 23219 Attn: Sarah McMahon Ph: 804-343-6057 Fax: 804-343-6699 Amount Owed: $174,720,000 Hennepin, WI Covanta Hennepin M&I National Trust Energy Resource Co., Company LP 321 N. Main Street P.O. Box 1980 West Bend, WI 53095-7980 Attn: Karen Zimmel Ph: 262-335-3084 Fax: 262-335-3037 Amount Owed: $ 74,895,000 Honolulu, HI Covanta Honolulu City and County of Resource Recovery Honolulu Venture Department of Environmental Services Attn: Timothy E. Steinberger Acting Director 650 S. King Street Honolulu, HI 96813 Attn: Timothy E. Steinberger Ph: 808-527-6663 Fax: 808-527-6675 Amount Owed: Unavailable Huntington, NY Covanta Huntington, LP U.S. Trust Company of New York Corporate Trust Division 114 West 47th Street, 25th Floor New York, NY 10036-1510 Attn: Matthew Lombardi Ph: 212-852-1652 Fax: 212-852-1625 Amount Owed: $128,615,000 Indianapolis, IN Covanta Indianapolis, Bank One Trust Company, Inc. N.A. Corporate Trust Services 111 Monument Circle, Suite IN1-0152 Indianapolis, IN 46277 Attn: Sharon P. Karst Ph: 317-756-1316 Fax: 317-592-5060 Amount Owed: $ 62,930,000 Lake County, FL Covanta Lake, Inc. First Union National Bank Corporate Trust Dept. 225 Water Street Jacksonville, FL 32231 Attn: John Speichert Ph: 904-489-3174 Fax: 904-489-5410 Amount Owed: $69,615,000 Marion, OR Covanta Marion, Inc. BNY Western Trust Company 601 Union Street Suite 1720 Seattle, WA 98101-2321 Attn: Perry Tobe Ph: 206-667-8904 Fax: 206-667-8905 Amount Owed: $26,270,000 Onondaga, NY Covanta Onondaga, LP Bankers Trust Company Corporate Trust and Agency Group 100 Plaza One Jersey City, NJ 07310 Attn: Scott Thiel Ph: 201-593-6849 Fax: 201-593-6450 Amount Owed: $147,300,000 Stanislaus, CA Covanta Stanislaus, The Bank of New York Inc. Corporate Trust Dept. 385 Rifle Camp Road West Paterson, NJ 07424 Attn: Sharon Jaffe-Goser Ph: 973-357-7833 Fax: 973-357-7840 Amount Owed: $56,255,000 Tulsa, OK Covanta Tulsa, Inc. Bank One Trust Co., N.A. 15 E. Fifth Street, 7th Floor Tulsa, OK 74103 Fax: 918-586-5351 Amount Owed: $49,355,000 Union, NJ Covanta Union, Inc. Bank of New York Corporate Trust Dept. 385 Rifle Camp Road, 3rd Floor West Patterson, NJ 07424 Fax: (973) 357-7840 - and - The Trust Company of New Jersey 35 Journal Square Jersey City, NJ 07306 Attn: Brad Von Arx, Jr. Ph: 201-420-2659 Fax: (201) 420-2928 Amount Owed: $ 190,950,000 Wallingford, CT Covanta Projects of State Street Bank and Wallingford, LP Trust Company Corporate Trust Goodwin Square 225 Asylum Street, 23rd Floor Hartford, CT 06103 Attn: Mark Forgetta Ph: 860-244-1837 Fax: 860-244-1884 Amount Owed: $32,690,000 Warren, NJ Covanta Warren Energy First Union National Resources Co., LP Bank Corporate Trust Bond Administration 21 South Street, 3rd Floor Morristown, NJ 07960 Attn: Chris Golabek Ph: 973-898-7169 Fax: 973-682-4531 Amount Owed: $38,285,000 In five of the 24 WTE Projects, the Subsidiary or Subsidiaries operate, but have no ownership interest in, the facility, and the WTE Trustees' security interest is founded on pledges to them of all the assets and revenues of the WTE Project (including the Operating Fee) by the WTE Projects' non-Debtor owners: WTE Project Debtor Subsidiary WTE Trustee ----------- ----------------- ----------- Hartford, CT Covanta Mid-Conn, Inc. State Street Bank and Trust Co. Corporate Trust Attn: Mark Forgetta Goodwin Square 225 Asylum Street, 23rd Floor Hartford, CT 06103 Attn: Mark Forgetta Ph: 860-244-1837 Fax: 860-244-1884 Amount Owed: Unavailable Hillsborough, FL Covanta Hillsborough, Hillsborough County Inc. Circuit Court Clerk PO Box 1110 Tampa, FL 33601 Ph: 813-272-6576 Fax: 813-272-5044 Amount Owed: Unavailable Huntsville, AL Covanta Huntsville, SouthTrust Bank Inc. Corporate Trust Dept. Attn: Woody Alston 110 Office Park Drive, 2nd Floor Birmingham, AL 35223 Attn: Woody Alston Ph: 205-254-4131 Fax: 205-254-4180 Amount Owed: Unavailable Lancaster Covanta Lancaster, Fulton Financial County, PA Inc. Advisors Corporate Trust Dept. One Penn Square PO Box 4887 Lancaster, PA 17604-4887 Ph: 717-291-2562 Fax: 717-295-2534 Amount Owed: Unavailable Montgomery Covanta Montgomery, US Trust Company of County, MD Inc. New York Corporate Trust 114 West 47th Street, 15th Floor New York, NY 10036-1532 Ph: 212-852-1000 Fax: 212-852-3433 Amount Owed: Unavailable The portion of the Cash Collateral of the WTE Trustees that the Company and its Subsidiaries seek to use is, in each case, only the Operating Fee and other payments due to the Company or its Subsidiaries under the non-default provisions of the WTE Agreements. In three of the 24 WTE Projects, no collateral issues arise, as the WTE Trustees have no security interest in the Operating Fee: WTE Project Debtor Subsidiary WTE Trustee ----------- ----------------- ----------- Kent County, MI Covanta Kent, Inc. U.S. Bank Trust Corporate Trust Services 101 N. Washington Square Lansing, MI 48993 Attn: Lorraine Grill Ph: 517-371-8055 Fax: 517-372-0175 Amount Owed: Unavailable Lee County, FL Covanta Lee, Inc. Bank of New York Corporate Trust Dept. Bondholder Relations 10161 Centurion Parkway Jacksonville, FL 32256 Attn: Lee Boenische Ph: 904-645-1914 Fax: 904-645-1998 Amount Owed: Unavailable Pasco County, FL Covanta Pasco, Inc. First Union National Bank Corporate Trust Dept. 225 Water Street Jacksonville, FL 32202 Attn: John Speichert Ph: 904-489-3174 Fax: 904-489-5410 Amount Owed: Unavailable (B) The Water Parties -- Covanta Bessemer, Inc., entered into agreements with: The Governmental Utility Services Corp. PO Box 670 Bessemer, AL 35021-0670 Fax: (205) 481-9859 - and - Southtrust Bank Corp. Trust Department P.O. Box 2554 Birmingham, AL 35290 Fax: (205) 254-4275 granting a security interest in the operating fee of the Bessemer, Alabama Water Project to secure repayment of an [unavailable] amount. (C) The IPP Parties -- The Company and certain of the Subsidiaries have entered into agreements with one or more Independent Power Production Parties, pledging assets or interests in other Subsidiaries to the IPP Parties to secure the repayment of indebtedness, including deferred purchase price obligations and obligations under certain leasing arrangements, to the IPP Parties: IPP Project Debtor Subsidiary IPP Party ----------- ----------------- --------- HFC Heber Field Company GE Capital Services Structured Finance Group, Inc. 120 Long Ridge Road Stamford, CT 06927 Attn: Warren MacGillivray Ph: (203) 961-5452 Fax: (203) 357-4890 Amount Owed: $7,135,000 HGC Heber Geothermal GE Capital Services Company Structured Finance Group, Inc. 120 Long Ridge Road Stamford, CT 06927 Attn: Warren MacGillivray Ph: (203) 961-5452 Fax: (203) 357-4890 Amount Owed: $14,525,200 Unidentified Covanta Power HypoVereinsbank Pacific, Inc. 30th floor 150 East 42nd Street New York, NY 10017-4679 Attn: Mr. Paul Colatrella Ph: 212-672-5776 Fax: 212-672-5516 Amount Owed: $19,406,826 (this may not be secured) SIGC Second Imperial GE Capital Services Geothermal Company Structured Finance Group, Inc. Attn: Warren MacGillivray 120 Long Ridge Road, Third Floor Stamford, CT 06927 Ph: 203-961-5452 Fax: 203-357-4890 Amount Owed: $47,466,205 (D) The Anaheim Parties -- Ogden Facility Management Corporation of Anaheim pledged the management fee of the Anaheim Project to secure an [unavailable] amount owed to: CSFB 11 Madison Avenue New York, NY 10010 Fax: (212) 325-0304 - and - State Street Bank and Trust Company of California, N.A. 633 West 5th Street, 12th Floor Los Angeles, CA 90071 Fax: (213) 362-7537 - and - AIG Financial Products Corp. 100 Nyala Farm Westport, CT 06880 Fax: (203) 222-4780 During the next 30-day period, Jeffrey R. Horowitz, Covanta's Senior Vice President for Legal Affairs relates, the Debtors project that cash disbursements will exceed cash receipts by some $47 million: Covanta Energy Corporation Estimated Cash Disbursements And Receipts For The 30-Day Period Following The Petition Date Estimated Cash Receipts From Energy Operations $30,571,000 From Non-Energy Operations 13,828,000 From Asset Sales --- ----------- Total Receipts $44,398,000 Estimated Cash Disbursements Energy Operating Disbursements $53,624,000 Energy Overhead 5,238,000 Energy Insurance 1,452,000 Critical Vendors 2,800,000 Capital Expenditures 3,300,000 Debt Service 3,678,000 Professional Fees 3,994,000 Non-Energy Operating Disbursements 15,226,000 Non-Energy Overhead 1,946,000 Taxes 275,000 ----------- Total Disbursements $91,533,000 ----------- Estimated Net Cash Uses $47,134,000 =========== Absent Bankruptcy Court authority to use the Secured Parties' Cash Collateral pursuant to section 363 of the Bankruptcy Code, Richard T. Franch, Esq., at Jenner & Block, tells Judge Blackshear, the Debtors will have insufficient cash funds available to conduct ordinary business operations and to maintain and preserve the property and assets of their estates. Without the ability to use the Secured Parties' Cash Collateral, the Debtors will not be able to continue business operations during the pendency of these chapter 11 cases. Cessation of the Debtors' business would cause immediate and irreparable harm to the Debtors' estates, Mr. Franch continues. The Debtors want to use the Secured Lenders' Cash Collateral and understand that they must provide those lenders with adequate protection of their security interests. Covanta proposes: (a) The Debtors will continue to perform all of their duties as operators and managers of the WTE Projects so that WTE Project cash flows will continue to be generated in the ordinary course, in exchange for which the WTE Trustees shall continue to make or permit to be made all payments and transfers required to be made to the Debtors under the non-default provisions of the relevant WTE Agreements; (b) The Debtors will, in the case of the Alexandria and Fairfax WTE Projects, continue to make all payments and transfers required to be made to the WTE Trustees under the non-default provisions of the relevant WTE Agreements; (c) The Debtors will consent to the continued payment and transfer by the WTE Trustees of amounts due to non-Debtors in accordance with the non-default provisions of the WTE Agreements; (d) Although continuation of the WTE Operating Obligations, WTE Debt Service Payments and Third Party Payments provides adequate protection to the WTE Trustees, out of an abundance of caution the WTE Trustees will be granted (effective upon the date of the Interim Order and without the necessity of the execution by the Debtors of mortgages, security agreements, pledge agreements, financing statements or otherwise) valid and perfected replacement security interests in, and liens on, all of the Debtors' right, title and interest in, to and under the WTE Trustee Collateral relating to each of their respective WTE Projects, subject only to (x) the Carve-Out under the DIP Financing Facility and (y) any validly perfected liens which remain senior to the liens granted to them; (e) The Debtors will continue to perform all of their duties as operators of the Water Project so that Water Project cash flows shall continue to be generated in the ordinary course, in exchange for which the Water Parties shall continue to make or permit to be made all payments and transfers required to be made to the Debtors under the nondefault provisions of the relevant Water Agreements; (f) Although continuation of the Water Operating Obligations provides adequate protection to the Water Parties, out of an abundance of caution the Water Parties will be granted valid and perfected replacement security interests in, and liens on, all of the Debtors' right, title and interest in, to and under the Water Collateral relating to each of their respective interests in the Water Project, subject only to (x) the Carve-Out under the DIP Financing Facility and (y) any validly perfected liens which remain senior to the liens granted to them; (g) Except as otherwise requested herein, the Debtors will, where applicable, continue to perform all of their duties as operators and managers of the IPP Projects so that IPP Project cash flows will be generated in the ordinary course, in exchange for which the IPP Parties will, where applicable, continue to make or permit to be made all payments and transfers required to be made to the Debtors under the non-default provisions of the relevant IPP Agreements; (h) The Debtors will make monthly payments of the interest component of amounts due to GE Capital at the non-default rates under the Heber IPP Agreements; (i) The Debtors will make quarterly payments of the interest component of amounts due to GE Capital at the non-default rates under the SIGC IPP Agreement. (j) GE Capital will be granted valid and perfected, replacement security interests in, and liens on, all of the Debtors' right, title and interest in, to and under the IPP Collateral relating to each of the IPP Projects, subject only to (x) the Carve-Out under the DIP Financing Facility and (y) any validly perfected liens which remain senior; (k) The Debtors will continue to perform all of their duties as managers of the Anaheim Project so that Anaheim Project cash flows will continue to be generated in the ordinary course, in exchange for which the Anaheim Parties will continue to make or permit to be made all payments and transfers required to be made to the Debtors under the non-default provisions of the relevant Anaheim Agreements; and (l) Although continuation of the Anaheim Managing Obligations provides adequate protection to the Anaheim Parties, out of an abundance of caution the Anaheim Parties will be granted valid and perfected replacement security interests in, and liens upon, all of the Debtors' right, title and interest in, to and under the Anaheim Collateral relating to each of their respective interests in the Anaheim Project, subject only to (x) the Carve-Out under the DIP Financing Facility and (y) any validly perfected liens which remain senior to the liens granted to them. The Debtors ask Judge Blackshear for permission to use these Secured Lenders' cash collateral, continue honoring their Project Obligations, and grant the Secured Parties replacement liens. The Debtors advise Judge Blackshear that this request is an integral part of the $463 million debtor-in-possession financing package arranged by the bank group. *** End of Issue No. 1 *** ------------------------------------------------------------------------- Peter A. Chapman peter@bankrupt.com http://bankrupt.com ------------------------------------------------------------------------- Recommended Reading: Professor Stuart Gilson's newest title, "Creating Value Through Corporate Restructuring: Case Studies in Bankruptcies, Buyouts, and Breakups." List Price: $79.95 -- Discounted to $55.96 at http://amazon.com/exec/obidos/ASIN/0471405590/internetbankrupt -------------------------------------------------------------------------