By John Stang
A week after announcing that private-equity firm J.F. Lehman had acquired Waste Control Specialists (WCS), the companies are largely closed-mouth about details of the deal.
The involved parties – Lehman, WCS, and former owner Valhi Inc. – announced the sale in three separate press releases after market close on Friday, Jan. 26. Primarily, this means Lehman now owns a 14,900-acre complex in West Texas for permanent disposal of low-level radioactive waste and other waste types.
None of the corporate statements cited the sale price, and Dallas-based Waste Control Specialists this week declined to release the figure. It also demurred on discussing other conditions of the sale, details of the negotiations, why Lehman bought WCS, possible managerial changes beyond the switch in CEO, and when WCS might renew its application with the Nuclear Regulatory Commission for a license to store used nuclear reactor fuel.
“The main thing is that nothing changes at the Andrews disposal facility,” Waste Control Specialists spokesman Chuck McDonald told the Odessa American. “The disposal operations will continue as they have been, so that’s obviously very positive.”
Lehman, meanwhile, did not respond to requests for additional comment.
The companies acknowledged in their statements last week that WCS President and CEO Rod Baltzer has been replaced by Scott State, CEO at New York City-based nuclear decommissioning provider NorthStar Group Services, which Lehman bought in 2017. Baltzer took over as Waste Control Specialists president in 2006 and CEO in 2015; he is staying on as a consultant during the ownership transition.
A Jan. 26 announcement from Valhi said Lehman is assuming all of WCS’s debts, liabilities, and financial assurance obligations. Valhi ’s waste management operation, which was essentially Waste Control Specialists, had $1.071 billion in long-term debt, according to a January filing with the U.S. Securities and Exchange Commission. Overall, WCS has $2.809 billion in total equity and $2.167 in total liabilities, the SEC filing says.
The company’s property in Andrews County, Texas, is permitted to receive Class A, B, and C low-level radioactive wastes (LLRW) and mixed low-level radioactive wastes.
In 2015, Valhi announced it would sell WCS for $367 million to Rockwell Holdco Inc., owner of nuclear services provider and LLRW disposal rival EnergySolutions, of Salt Lake City. But the U.S. Justice Department sued in 2016 to block the deal, and a federal judge ruled last June the proposed sale violated federal antitrust laws. The companies abandoned the merger rather than appeal.
The failed sale to triggered a $170.6 million long-lived asset impairment charge, which dropped WCS from $3.6 million in operating income to a $167 million operating loss in the first nine months of 2017, according to an SEC filing. It was the latest in a series of losses for the company.
During the federal bench trial, an attorney for Waste Control Specialists argued his client could be forced to close shop and cover its facility if it did not find a buyer. The company and state of Texas have over the past year taken steps to drop waste disposal fees for the site in hopes of attracting additional business. There is also hope that business could pick up as an increasing number of nuclear plants being decommissioned create more radioactive waste that needs a disposal site.
Waste Control Specialists in April 2016 filed an application with the NRC to build a facility on its property for storage of up to 40,000 metric tons of spent fuel from U.S. commercial nuclear power reactors. If built, the site could help the Department of Energy meet its legal mandate to remove that waste from nuclear sites. The DOE deadline to begin accepting waste was Jan. 31, 1998, and the federal government has since then paid out about $6 billion to utilities that remain stuck with the material.
However, WCS last April asked the NRC to suspend its technical review of the application to save money while it waited on the outcome of the EnergySolutions deal. There has been no official word since then on the future of the application, though the successful sale suggests that process could resume at some point.
Waste Control Specialists is already part of NorthStar’s team for its planned acquisition and decommissioning of the retired Vermont Yankee nuclear power plant. NorthStar hopes to seal the deal this year and to complete decommissioning by 2026, with low-level radioactive waste shipped to Texas.
“WCS maintains an industry-leading reputation and provides an essential solution for the safe disposal of specialized waste streams. We are excited to support the long-term success of the business through continued engagement and partnership with industry stakeholders, including strengthening the partnership with NorthStar to deliver a best-in-class nuclear power plant decommissioning solution,” said Lehman Partner Alex Harman in a press release.
Waste Control Specialists was the second leading shipper of transuranic waste to the Energy Department’s Waste Isolation Pilot Plant in New Mexico during 2017, sending 18 shipments after the underground disposal site resumed receiving waste last April. WIPP experienced an extended outage following a February 2014 underground fire and radiological release.
The waste going from WCS to WIPP originated at the Los Alamos National Laboratory in New Mexico, and would have gone straight to WIPP had the disposal site been operational.
