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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
September 30, 1997
KTI, INC.
(Exact name of Registrant as specified in Charter)
New Jersey 33-85234 22-2665282
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(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification
Number)
7000 Boulevard East, Guttenberg, New Jersey 07093
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(Address of principal executive office) (Zip Code)
Registrant's telephone number including area code- (201) 854-7777
Not Applicable
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(Former name and former address, as changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On September 30, 1997, KTI, Inc., a New Jersey corporation (the Company or
the Registrant) purchased a 49.5% limited partnership interest in Penobscot
Energy Recovery Company, Limited Partnership, a Maine limited partnership
("PERC") from The Prudential Insurance Company of America ("Prudential") for
approximately $11.7 million in cash. In addition the Company assumed certain
liabilities of Prudential by the payment of cash in the amount of $200,000 to
Prudential and the issuance of Letters of Credit to Morgan Guaranty Trust
Company of New York ("Morgan Guaranty") for approximately $3.9 million,
replacing obligations of Prudential to Morgan Guaranty. At the same time, the
Company purchased an option for $300,000 to buy the remaining 15.2% interest of
Prudential in PERC for a price of $2.1 million. The option to purchase
Prudential's remaining limited partnership interest terminates on October 31,
1998.
With this purchase, the Company's interest in PERC has increased to 56.5%.
Prudential owns a 15.2% limited partnership interest. A subsidiary of Pacificorp
holds the remaining 28.3% interest in PERC, 3% as a general partner and 25.3% as
a limited partner.
PERC is located in Orrington, Maine and owns a 25 megawatt waste to energy
power generating plant. Power is produced by processing approximately 250,000
tons of municipal solid waste received from 230 communities in Maine. The power
is sold to Bangor Hydro-Electric Company under a long term power supply
contract. PERC had $30.3 million of revenue and $6.1 million of net income in
1996. For the six months ended on June 30, 1997, PERC had revenue of $15.1
million and net income of $3.4 million.
Item 5. Other Events.
In early October 1997, WEXFORD KTI LLC converted all of its $5 million
principal amount Convertible Subordinated Promissory Note dated as of October
23, 1996 into 618,609 shares of the Company's common stock.
Item 6. Resignation of Registrant's Director.
Kenneth A. Rubin, an Officer of WEXFORD KTI LLC, resigned as a director of
the Company. No disagreement exists, to the knowledge of the Company, between
Mr. Rubin and the Company as to the Company's operations, policies or practices.
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Item 7. Financial Statements and Exhibits
(a) Financial Statements of the business acquired.
The audited balance sheet of Penobscot Energy Recovery Company, Limited
Partnership, as of December 31, 1996 and 1995 and the related statements of
income, changes in partners' capital and cash flow for each of the three years
in the period ended December 31, 1996 were included in the Registrant's Form
10-K for the fiscal year ended December 31, 1996.
(b) Pro Forma Financial information.
It is impractical to provide the required pro forma financial information at
this time. The results of the Registrant's investment in Penobscot Energy
Recovery Company, Limited Partnership have previously been reported on an equity
basis. The required consolidated financial information will be reported in the
Form 10-Q for the period ended September 30, 1997.
(c) Exhibits.
Exhibit Number Description
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4.1 PURCHASE AND OPTION AGREEMENT by and between PERC
Management Company Limited Partnership and The
Prudential Insurance Company of America dated September
30, 1997. The exhibits to the PURCHASE AND OPTION
AGREEMENT do not contain information which is material
to an investment decision.
4.2 SECOND AMENDMENT TO THE SECOND AMENDED AND RESTATED
AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP OF
PENOBSCOT ENERGY RECOVERY COMPANY, LIMITED PARTNERSHIP
dated as of September 29, 1997.
4.3 ASSIGNMENT AND ASSUMPTION AGREEMENT between The
Prudential Insurance Company of America and PERC
Management Company Limited Partnership dated as of
September 29, 1997 re Penobscot Energy Recovery Company,
Limited Partnership.
4.4 AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENT AND RELEASE
OF ASSIGNMENT DATED as of September 29, 1997 to the
Reimbursement Agreement dated as of May 28, 1991 of
Penobscot Energy Recovery Company, Limited Partnership
in favor of Morgan Guaranty Trust Company of New York re
Penobscot Energy Recovery Company, Limited Partnership.
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4.5 ASSIGNMENT AND ASSUMPTION AGREEMENT between The
Prudential Insurance Company of America and PERC
Management Company Limited Partnership dated as of
September 29, 1997 re Orrington Waste Ltd., Limited
Partnership.
4.6 AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENT AND RELEASE
OF ASSIGNMENT DATED as of September 29, 1997 to the
Reimbursement Agreement dated as of May 28, 1991 of
Penobscot Energy Recovery Company, Limited Partnership
in favor of Morgan Guaranty Trust Company of New York re
Orrington Waste Ltd., Limited Partnership.
4.7 News release dated October 1, 1997.
4.8 Letter of Kenneth A. Rubin dated September 22, 1997.
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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 hereunto duly authorized.
KTI, Inc.
(the Registrant)
Dated: October 15, 1997 By: /s/ Martin J. Sergi
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Name: Martin J. Sergi
Title: President
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EXHIBIT INDEX
Exhibit Number Description
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4.1 PURCHASE AND OPTION AGREEMENT by and between PERC
Management Company Limited Partnership and The
Prudential Insurance Company of America dated September
30, 1997. The exhibits to the PURCHASE AND OPTION
AGREEMENT do not contain information which is material
to an investment decision.
4.2 SECOND AMENDMENT TO THE SECOND AMENDED AND RESTATED
AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP OF
PENOBSCOT ENERGY RECOVERY COMPANY, LIMITED PARTNERSHIP
dated as of September 29, 1997.
4.3 ASSIGNMENT AND ASSUMPTION AGREEMENT between The
Prudential Insurance Company of America and PERC
Management Company Limited Partnership dated as of
September 29, 1997 re Penobscot Energy Recovery Company,
Limited Partnership.
4.4 AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENT AND RELEASE
OF ASSIGNMENT DATED as of September 29, 1997 to the
Reimbursement Agreement dated as of May 28, 1991 of
Penobscot Energy Recovery Company, Limited Partnership
in favor of Morgan Guaranty Trust Company of New York re
Penobscot Energy Recovery Company, Limited Partnership.
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4.5 ASSIGNMENT AND ASSUMPTION AGREEMENT between The
Prudential Insurance Company of America and PERC
Management Company Limited Partnership dated as of
September 29, 1997 re Orrington Waste Ltd., Limited
Partnership.
4.6 AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENT AND RELEASE
OF ASSIGNMENT DATED as of September 29, 1997 to the
Reimbursement Agreement dated as of May 28, 1991 of
Penobscot Energy Recovery Company, Limited Partnership
in favor of Morgan Guaranty Trust Company of New York re
Orrington Waste Ltd., Limited Partnership.
4.7 News release dated October 1, 1997.
4.8 Letter of Kenneth A. Rubin dated September 22, 1997.