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Exhibit 4.8
NEWS RELEASE
FOR IMMEDIATE RELEASE
KTI, Inc. Announces Completion of PERC's
Utility Contract Restructuring
Guttenberg, N. J. (June 26, 1998) -- - KTI, Inc. (Nasdaq: KTIE) announced
today the successful completion of a major overhaul of the various contracts and
obligations of its waste-to-energy subsidiary, Penobscot Energy Recovery
Company, Limited Partnership (PERC). This major restructuring involves the waste
supply agreements with the constituent municipalities, the power sales agreement
with Bangor Hydro (PERC's sole utility customer), as well as a refinancing of
the tax exempt bonds for PERC. KTI is a 71.3% owner and general partner of PERC.
The refinancing was made possible through the sale of approximately
$45,000,000 in Electric Rate Stabilization Revenue Refunding bonds issued by the
Finance Authority of Maine (FAME). The yield on the bonds ranges from 3.75% for
1-year term bonds to 5.20% for 20-year term bonds. Proceeds were used to retire
PERC's existing outstanding bonds, thereby reducing its debt service costs and
extending the term of its current 5-year bonds.
The refinancing was part of a complex transaction involving KTI, PERC,
FAME, the Maine Legislature, Bangor Hydro-Electric Company, the Public Utilities
Commission of Maine, and the Municipal Review Committee (MRC) which represents
over 130 Maine municipalities.
The refinancing was facilitated under the auspices of the Maine
Legislature through an amendment to the Electric Rate Stabilization Program that
allowed PERC to qualify for such financing. Under the agreement, the State of
Maine's "moral obligation" supports the new non-recourse debt.
The PERC refinancing agreement and the associated restructuring of the
power sales agreement is also intended to enhance the financial objectives of
Bangor Hydro-Electric including a rate reduction of its contractual obligation
to purchase PERC's power output through the year 2018. The agreement addresses
Bangor Hydro's desire to reduce the burden on its ratepayers caused by the
existing power purchase agreement with PERC. The restructuring also stabilized
tipping fees for the municipalities which PERC serves in exchange for the
extension of their commitment to provide up to 180,000 tons of solid waste each
year to PERC through the year 2018.
As part of the closing of the transaction, Bangor Hydro made a one-time
payment of $6 million to PERC and will make additional quarterly payments of
$250,000 for four years totaling $4 million.
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KTI, Inc.
In addition, Bangor Hydro issued one million warrants to PERC and one
million warrants to MRC. Each warrant entitles the warrant holder to acquire one
share of Bangor Hydro common stock at a price of $7 per share. The warrants vest
over four years and expire in 10 years.
KTI President, Martin J. Sergi said, "This is an extremely important and
valuable transaction for all parties involved. As for KTI, the transaction has
some near term impact on earnings, which are perfectly manageable as expected.
We will both increase and strengthen our cash flow which is locked in for the
years ahead. In addition, KTI will have an equity stake in Bangor Hydro. As a
further benefit, the communities have extended their contracts with PERC by 15
years to supply the required stream of solid waste into the facility, and the
Public Utilities Commission in Maine has approved the rate that PERC charges
Bangor Hydro for electricity for the next 20 years. This is another illustration
of the strong public/private partnership developed by KTI's subsidiaries in
Maine."
PERC processes approximately 250,000 tons of municipal solid waste a year
from 230 Maine communities and generates over 160,000 megawatt hours of
electricity per annum, which is sold to Bangor Hydro Electric Company. In 1997,
PERC generated $31.6 million in revenue and net income of $7.3 million.
Energy National, Inc. (ENI), a subsidiary of NRG Energy, which is also a
general partner of PERC, owns 28.7% of PERC.
***
KTI is a fully integrated waste management company whose core reputation
was established in the waste-to-energy sector. KTI owns and operates two
waste-to-energy facilities in Maine, two waste-to-energy facilities in Virginia;
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, a full-service environmental company based in Newington, New
Hampshire, a Maryland company specializing in marketing post-industrial
recycling plastics, a paper and metals recycling company in Biddeford, Maine and
a world wide secondary fiber marketing company based in Portland, Oregon. It
also holds a majority interest in America's only commercially operational
municipal waste ash recycling facility in Nashville, Tennessee
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.