Holding company Valhi Inc. said Tuesday it 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 a 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.”
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 and Waste Control Specialists on Wednesday did not respond to requests for comment on what companies might be prepared to consider the acquisition.
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 WCS.
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.
