UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 21, 2003
Covanta Energy Corporation
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-3122 13-5549268
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(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
40 Lane Road, Fairfield, New Jersey 07004
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (973) 882-9000
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Item 3. Bankruptcy or Receivership.
As previously reported, on April 1, 2002 (the "Petition Date"), Covanta Energy
Corporation, a Delaware corporation ("Covanta"), and its affiliated debtor
subsidiaries (each a "Debtor" and, collectively with the Company, the "Debtors")
filed their respective voluntary petitions for relief under Chapter 11 of the
United States Bankruptcy Code in the United States Bankruptcy Court for the
Southern District of New York (the "Court"). The reorganization cases are being
jointly administered under the caption "In re Ogden New York Services, Inc. et
al., Case No. 02-40826." During the course of the proceedings, the Debtors have
operated their respective businesses and managed their respective properties and
assets as debtors-in-possession.
On September 5, 2003, Covanta and certain of its subsidiaries (collectively, the
"Sellers") executed an ownership interest purchase agreement (as amended, the
"Original Agreement") with certain affiliates of ArcLight Energy Partners Fund
I, L.P. and Caithness Energy, L.L.C (collectively, the "Stalking Horse Buyers")
providing, among other things, for the sale of the Sellers' interests in Heber
Geothermal Company, Heber Field Company, Second Imperial Geothermal Company,
Mammoth-Pacific L.P (a non-debtor affiliate of Covanta) and related assets (the
"Geothermal Business"), subject to higher or better offers. The Original
Agreement entitled the Stalking Horse Buyers to a break-up fee of $5,375,000
(the "Break-Up Fee") in the event that a higher or better offer was chosen in
the auction. The purchase price under the Original Agreement was $170,000,000,
subject to adjustment.
In connection with the proposed sale, on September 8, 2003, certain of the
Debtors, including AMOR 14 Corporation, Covanta SIGC Energy, Inc., Covanta SIGC
Energy II, Inc., Heber Field Company, Heber Geothermal Company and Second
Imperial Geothermal Company, L.P. (collectively the "Heber Debtors") filed the
Joint Plan of Reorganization Under Chapter 11 Of The Bankruptcy Code (as
amended, the "Heber Plan") and the related disclosure statement (as amended, the
"Disclosure Statement"). On September 24, 2003, the Heber Debtors filed the
Heber Debtors' First Amended Joint Plan Of Reorganization Under Chapter 11 Of
The Bankruptcy Code and the related Disclosure Statement. On September 29, 2003,
the Court entered an order approving the competitive bidding and auction
procedures, including the Break-Up Fee, for the purpose of obtaining the highest
or best offer for the Geothermal Business (the "Bidding Procedures Order"). On
October 3, 2003, the Court entered an order approving the Disclosure Statement
and, among other things, authorizing the distribution of the Heber Plan to
affected creditors and parties in interest. The Heber Debtors made certain
non-material revisions to the Heber Plan and filed the Heber Debtors' Second
Amended Joint Plan Of Reorganization Under Chapter 11 Of The Bankruptcy Code on
October 13, 2003.
In accordance with the Court's order, the Heber Debtors distributed copies of
the Disclosure Statement and the Heber Plan to all creditors of the Heber
Debtors and all parties to the contracts and leases that would be assumed and/or
assigned under the Heber Plan. All non-insider classes of claims against and
interests in the Heber Debtors were deemed to accept the Heber Plan pursuant to
11 U.S.C. 1126(f) and were therefore not entitled to vote on the Heber Plan.
On November 19, 2003, the Court held an auction to consider bids for the
Geothermal Business pursuant to the Court-approved bidding procedures. During
the auction, Covanta and its creditor representatives considered various bids
for the Geothermal Business. Following the auction, Covanta, with the consent of
its creditor representatives, determined that the bid submitted by certain
affiliates of Ormat Nevada, Inc. ("Ormat"), which offered a purchase price of
$214,000,000, subject to adjustment, represented the highest or best offer for
the Geothermal Business.
On November 21, 2003, the Court entered an Findings Of Fact, Conclusions Of Law
And Order Under 11 U.S.C. ss. 1129 And Rule 3020 Of The Federal Rules Of
Bankruptcy Procedure (i) Confirming The Heber Debtors' Third Amended Joint Plan
Of Reorganization Under Chapter 11 Of The Bankruptcy Code And (ii) Approving The
Sale Of Certain Interests To The Successful Bidder (the "Confirmation Order"),
thereby confirming the Heber Plan and approving the sale of the Geothermal
Business to Ormat pursuant to a purchase agreement that was executed on November
21, 2003. A copy of the Confirmation Order is attached hereto as Exhibit 2.2 and
is incorporated herein by reference. On the same date, the Heber Debtors made
certain non-material revisions to the Heber Plan and filed the Heber Debtors'
Third Amended Joint Plan Of Reorganization Under Chapter 11 Of The Bankruptcy
Code. A copy of the Heber Plan, as confirmed by the Court, is attached hereto as
Exhibit 2.1.
Because Ormat's bid was determined to be the highest or best offer for the
Geothermal Business, as required by the Original Agreement and the Bidding
Procedures Order, Covanta will pay the Stalking Horse Buyers the Break-Up Fee.
Although the Court has entered the Confirmation Order, the Heber Plan is not yet
effective. The Heber Plan and the Confirmation Order contain certain conditions
precedent to the occurrence of the Effective Date of the Heber Plan, unless
waived pursuant to the Heber Plan. One such condition is the closing of the sale
of the Geothermal Business, which is expected to occur prior to the end of the
year, and is subject to customary conditions precedent. The Effective Date of
the Heber Plan has not yet occurred.
Summary of Heber Plan
The following is a summary of the material features of the Heber Plan and is
qualified in its entirety by reference to the Heber Plan itself. Capitalized
terms used but not defined herein shall have the meanings assigned to them in
the Heber Plan.
Among other things, the Heber Plan provides that all non-insider creditors of
the Heber Debtors shall be paid in full and will not be impaired under the Heber
Plan. Subject to the terms of the Heber Plan, the Company or its subsidiaries
are generally responsible, either directly or through certain purchase price
adjustments, for payment of amounts due to holders of Claims under the Heber
Plan. Pursuant to the Heber Plan, all material contracts and leases related to
the Geothermal Business are being assumed by the applicable Debtors and, as
necessary, assigned to Ormat.
The implementation of the Heber Plan is predicated upon the closing of the sale
of the Geothermal Business.
Summary of Distributions to be made by the pursuant to the Heber Plan
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Claims Description Treatment Under Heber Plan
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Class 1 Claims: Allowed Priority Each holder of an Allowed Class 1 Claim
Non-Tax Claims shall receive, in full settlement,
release and discharge of its Class 1
Claim, either (i) Cash, on the
Distribution Date, in an amount equal to
such Allowed Claim, or (ii) such other
less favorable terms as Covanta and the
holder of an Allowed Priority Non-Tax
Claim agree; provided, however, that no
agreement under subsection (ii) above
shall impose any obligation upon the
Reorganized Heber Debtors beyond the
payment of amounts calculated in
accordance with the Working Capital
Adjustment.
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Class 2H Claims: Allowed GECC Secured The holder of the Allowed Subclass 2H-A
Claims, which is divided into two Claims shall retain, unaltered, the
Subclasses (i) Subclass 2H-A (Allowed legal, equitable and contractual rights,
GECC Secured SIGC Claims) and (ii) including, without limitation, any valid
Subclass 2H-B (Allowed GECC Secured and perfected Liens that secure such
HGC/HFC Claims) Allowed Claim, provided, however, that
the assets of the Heber Debtors subject
to the GECC Liens may be sold, subject to
such GECC Liens, as part of the
Geothermal Sale contemplated by the Heber
Reorganization Plan; provided, further,
if GECC consents to the sale of the
Equity Interests in SIGC Project Company
pursuant to Section 2.1 of the
Alternative Transaction Purchase
Agreement, the holder of Allowed Subclass
2H-A Claims shall release any and all
Liens, Claims and encumbrances in the
Equity Interests and assets of SIGC One
Sub, SIGC Two Sub, Amor and any other
Debtors (other than SIGC Project
Company).
Covanta shall pay to each holder of an
Allowed Subclass 2H-B Claim, in full
settlement, release and discharge of its
Subclass 2H-B Claim, either (i) Cash, on
the Effective Date, in an amount equal to
such Allowed Subclass 2H-B Claim, or (ii)
such other less favorable terms as
Covanta and the holder of an Allowed GECC
Secured HGC/HFC Claim agree provided,
however, that no agreement under
subsection (ii) above shall impose any
obligation upon the Reorganized Heber
Debtors beyond the payment of amounts
calculated in accordance with the Working
Capital Adjustment.
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Class 3H: Allowed Secured Claims On the Effective Date, the legal,
equitable and contractual rights of the
holders of Allowed Class 3H Claims will
be reinstated in full satisfaction,
release and discharge of their respective
Class 3H Claims and will remain
unaltered, except as the relevant Heber
Debtor (or, on or after the Effective
Date, Reorganized Heber Debtor) and the
holders of Allowed Class 3H Claims may
otherwise agree or as such holders may
otherwise consent. Notwithstanding the
foregoing, no contractual provisions or
applicable law that would entitle the
holder of an Allowed Class 3H Claim to
demand or receive payment of such Claim
prior to the stated maturity of such
Claim, terminate any contractual
relationship or take such other
enforcement action (as may be applicable)
from and after the occurrence of a
default that occurred prior to the
Effective Date shall be enforceable
against the Reorganized Heber Debtors. In
lieu of the foregoing, any Heber Debtor
(or, on or after the Effective Date,
Reorganized Heber Debtor) may, at its
election, make a Cash payment to the
holder of an Allowed Class 3H Claim equal
to the full amount of the holder's
Allowed Class 3H Claim, together with
interest at the legal rate to the extent
required by law, in full settlement,
release and discharge of such Class 3H
Claim.
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Class 7 Claims: Allowed Unsecured On the Distribution Date, each holder of
Claims an Allowed Class 7 Claim shall receive,
in full settlement, release and discharge
of its Class 7 Claim, a Cash payment
equal to the full amount of its Allowed
Class 7 Claim, together with interest at
the legal rate to the extent required by
law.
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Class 8 Claims: Heber Intercompany The legal, equitable and contractual
Claims rights of holders of Heber Intercompany
Claims in respect of such claim shall not
be affected, altered or Impaired under
the Heber Reorganization Plan.
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Class 9 Claims: Intercompany Claims On the Effective Date, all Intercompany
Claims shall be cancelled, annulled and
extinguished. Holders of such Claims
shall receive no Distributions in respect
of Class 9 Claims.
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Class 14 Equity Interests: Equity Holders of Allowed Class 14 Equity
Interests in Heber Debtors Interests shall not receive any
Distribution under the Heber
Reorganization Plan in respect of Class
14 Equity Interests. Class 14 Equity
Interests, upon the Effective Date, shall
continue to be held by one or more of the
Reorganized Heber Debtors or Debtor
Sellers, as the case may be, with such
Equity Interests held by the Debtor
Sellers to be transferred by the Debtor
Sellers to the Buyers at the Closing
pursuant to the terms of the Alternative
Transaction Purchase Agreement.
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As of November 1, 2003, Covanta had 49,824,251 shares of common stock
outstanding. None of Covanta's authorized common stock has been reserved for
future issuances in respect of claims and interests filed and allowed under the
Heber Plan.
For financial information regarding the assets and liabilities of the Debtors
refer to the Quarterly Report for Covanta Energy Corporation on Form 10-Q for
the quarterly period ended September 30, 2003.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of business acquired: [Not applicable].
(b) Pro forma financial information: [Not applicable].
(c) Exhibits:
2.1 Heber Debtors' Third Amended Joint Plan of Reorganization
under Chapter 11 of the Bankruptcy Code.
2.2 Findings of Fact, Conclusions of Law and Order confirming
the Heber Debtors' Third Amended Joint Plan of
Reorganization under Chapter 11 of the Bankruptcy Code and
Approving the Sale of Certain Interests to the Successful
Bidder dated November 21, 2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
Date: November 26, 2003
COVANTA ENERGY CORPORATION
By: /s/ Jeffrey R. Horowitz
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Name: Jeffrey R. Horowitz
Title: Senior Vice President, General
Counsel and Secretary