Holding company Valhi Inc. continues to seek new potential buyers for its Waste Control Specialists (WCS) subsidiary, but has not ruled out shutting down the business in the wake of its foiled acquisition by EnergySolutions.
“We have in the past considered and evaluated various strategic alternatives with respect to our Waste Management Segment,” which consists entirely of WCS, Valhi said in an Aug. 8 10-Q filing with the U.S. Securities and Exchange Commission. “We are actively pursuing other third parties in an attempt to dispose of the Waste Management Segment’s business.”
Rod Baltzer, WCS president and CEO, declined to comment on the statement, which did not cite any specific potential buyers. Holtec International and Veolia have been mentioned as possibly having interest in the acquisition, one industry source said; Veolia declined via a spokesman to comment on the rumors, while Holtec did not respond to a query.
Dallas-based Waste Control Specialists primarily operates a storage complex for low-level radioactive waste (LLRW) and other waste types in Andrews County, Texas. The business has endured steep losses in recent years, and Valhi in November 2015 agreed to sell it for $367 million to LLRW disposal rival EnergySolutions, of Salt Lake City.
A federal judge in June blocked the deal, favoring the U.S. Justice Department’s legal argument that the sale would create a monopoly in the U.S. market for LLRW disposal. Valhi and EnergySolutions parent Rockwell Holdco abandoned the buyout rather than appealing the court ruling.
Valhi in June received a $4 million termination fee from Rockwell Holdco, according to the 10-Q. But the dissolution of their agreement required Valhi to evaluate the recoverability of WCS’ long-lived assets: That led to a $170.6 million impairment charge as of June 30 covering the waste management company’s net property and equipment; operating permits for its waste disposal facility in Andrews County; and other assets.
Nonetheless, management believes another company might still be interested in snapping up WCS, particularly if their operations and business plans are complementary, Valhi said. That is not assured, it acknowledged, and the company is prepared to reduce or even halt all funding for its waste business if no good buyer materializes. This would be in line with a statement from a WCS attorney during the antitrust trial, that the West Texas storage site could be closed and covered if the sale did not happen.
Valhi as a whole reported $8.8 million ($0.03 per diluted share) in net income attributable to stockholders for the second quarter of 2017; that compares to a net loss of $8.5 million ($0.02 per diluted share) during the same quarter last year. The benefit derived largely from improvements in its chemicals business, undercut by the long-lived asset impairment charge for Waste Control Specialists.
Sales in the waste management segment increased by $9.4 million on a year-over-year basis, thanks to higher disposal volumes and transportation revenue. The operating loss in the waste business prior to the impairment charge was $1 million for the quarter, an improvement over its $7.1 million loss in 2016.
The 10-Q, along with Waste Control Specialists’ quarterly earnings report released on the same day, made no mention of the company’s intentions to open a facility for interim storage of spent nuclear fuel from U.S. reactors.
In April 2016, WCS applied for a Nuclear Regulatory Commission license to build and operate the facility at its Texas complex that would hold up to 40,000 metric tons of used fuel until the federal government meets its legal obligation to find a permanent home for the material. However, the company in April of this year asked the regulator to suspend review of the application pending the outcome of the EnergySolutions merger. While management has been mum on the matter since the deal was blocked, Valhi said in its prior 10-Q that it did not expect to receive the license.
Holtec International last March also applied for an NRC license for an interim storage facility, this one in southeastern New Mexico. The regulator is currently conducting an acceptance review of the application; Holtec hopes to close the licensing process in two years and to by 2022 open the facility with capacity for up to 120,000 metric tons of waste.
Roughly 75,000 metric tons of spent reactor fuel is now stored on-site at nuclear plants around the country. That amount grows by about 2,000 metric tons a year.
