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NEWS RELEASE
FOR IMMEDIATE RELEASE
FINANCE AUTHORITY OF MAINE (FAME) APPROVES $50,000,000
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FINANCING FOR PENOBSCOT ENERGY RECOVERY COMPANY (PERC) IN
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REVISED POWER AGREEMENT WITH KTI, INC.
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GUTTENBERG, N.J. (FEB. 23, 1998) -- KTI, Inc. (Nasdaq: KTIE) announced
today that it has signed an agreement with the Finance Authority of Maine
(FAME) which will provide up to $50,000,000 in financing to the Penobscot
Energy Recovery Company (PERC) under FAME'S Electric Rate Stabilization
Program. KTI is a 71.3% owner and general partner in PERC.
The PERC financing, which will have a twenty year term, will be used to
refund existing Industrial Revenue Bonds which helped finance the original
development and construction of PERC. FAMES's financing for PERC was made
possible by a recent amendment by the Maine Legislature to the Electric Rate
Stabilization Program which allows independent power producers (IPP's) to
qualify for financing.
Under the terms of the agreement, the State of Maine's "moral
obligation" will support the non-recourse debt. Bangor Hydro-Electric Company
and KTI will also provide limited guarantees for the PERC borrowing.
The PERC financing agreement is intended to enhance the financial
stability of Bangor Hydro-Electric, which is contractually obligated to
purchase PERC's power output for 30 years through 2017. The agreement addresses
Bangor Hydo's desire to reduce the burden on its ratepayers caused by the
existing power purchase agreement (PPA) with PERC. The restructuring will also
stabilize tipping fees for 130 municipalities in exchange for their commitment
to provide up to 180,000 tons of municipal solid waste each year to PERC through
2018.
At the financial closing Bangor Hydro will make a one time payment of $6
million to PERC at the time of the refinancing of the debt and will make
additional quarterly payment of $250,000 for four years, amounting to a total
of $4 million. In addition, at the financial closing Bangor Hydro will issue
one million warrants to PERC and one million warrants to the Municipal Review
Committee (MRC) which represents the 130 charter municipalities. Each warrant
entitles the warrant holder to acquire one share of Bangor Hydro common stock
at a price of $7 per share. The warrants will vest over four years and will
expire 10 years after the date of issue.
Finally, it was agreed by the parties that the balance of any funds
available for distribution will be distributed one-third to the charter
municipalities, one-third to Bangor Hydro and one-third to PERC owners.
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Martin J. Sergi, president of KTI said, "We're gratified that FAME has
approved this financing for PERC. We see this as a win-win situation for all
parties involved. KTI is pleased with our part in helping Bangor Hydro
ratepayers achieve lower electricity rates. In addition, 130 municipalities in
Maine will have secured an environmentally-sound solution and stabilized rates
for their waste disposal. Bangor Hydro and PERC will also mutually benefit from
the restructured power purchase agreement."
Located in Orrington, Maine, PERC processes approximately 250,000 tons
of municipal solid waste a year from 230 Maine communities and generates 25
megawatts of electricity which is sold to Bangor Hydro Electric Company. In
1997, PERC generated $31.6 million revenue and net income of $7.3 million.
28.3% of PERC is owned by Energy National, Inc. (ENI), a subsidiary of
NRG Energy, which is also a general partner of PERC.
The Finance Authority of Maine was established in 1983 as Maine's
business finance agency. FAME is charged with supporting the start up,
expansion and growth plans of Maine's business community by working closely
with Maine's lending community to improve access to capital as well as to help
fill gaps that exist in the State's capital delivery system. FAME offers a wide
array of business assistance programs, ranging from traditional loan guarantee
programs for both small and larger businesses, to tax credits for investments
that individuals make in dynamic, growth oriented, manufacturing or export
related firms. The Finance Authority has also established taxable and tax
exempt bond financing programs that allow strong creditworthy firms in Maine
to access capital at very favorable rates and terms.
KTI is a fully integrated waste management company whose core
reputation was established in the waste-to-energy sector. KTI currently owns
and operates two waste-to-energy facilities in Maine; a biomass-to-energy plant
in Florida, and wood processing operations in Maine and Georgia. Collectively,
these businesses handle in excess of 1,000,000 tons of material annually.
KTI also owns and operates major recycling facilities in Boston, Newark
and Chicago, holds a majority interest in America's only commercially
operational municipal waste ash recycling facility in Nashville, Tenn. and owns
a full-service environmental company based in Newington, N.H., a Maryland
company specializing in marketing post-industrial recycled plastics, a paper and
metals recycling company in Biddeford, Maine and a world wide secondary fiber
marketing company based in Portland, Ore.
For further information, contact Marty Sergi at KTI, Inc. (201)
854-7777 or Frank N. Hawkins, Jr. or Julie Marshall at Hawk Associates, Inc.
(305) 852-2383. Copies of KTI press releases, SEC filings, current price
quotes, stock charts, analysts' comments and other valuable information for
investors may be found on the website http://www.hawkassociates.com
This release contains various forward looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 which represent the company's expectations or
beliefs concerning future events of the company's financial performance. These
forward looking statements are qualified by important factors that could cause
actual results to differ materially from those in the forward looking
statements. Results actually achieved may differ materially from expected
results included in these statements.