By Tom Hals and Soyoung Kim
April 24 Carlyle Group LP's Synagro
Technologies Inc filed for Chapter 11 bankruptcy protection on
Wednesday with a plan to sell the business to a Swedish private
equity firm for $455 million.
Synagro, the largest recycler of organic waste in the United
States, has agreed to a sale to an investment fund associated
Carlyle's infrastructure fund had borrowed heavily to take
Synagro private in 2007 in a $772 million deal.
Carlyle declined to comment.
The company contacted more than 100 potential buyers over
the past four months as it sought a buyer, its chief executive,
Eric Zimmer, told Reuters. "We cast the net pretty wide."
The sale is subject to higher bids and must be approved by
the U.S. Bankruptcy Court in Wilmington, Delaware, where Synagro
filed for Chapter 11 protection from creditors.
Synagro, based in Houston, said in a statement it
anticipates the sale will be completed in 60 to 90 days.
The company also agreed to a $30 million
debtor-in-possession, or DIP, loan with its current lenders to
fund operations during its bankruptcy.
The 2007 deal that took Synagro private left it vulnerable
when municipalities cut spending on wastewater treatment and
other environmental projects in the aftermath of the 2008
The company manages byproducts of wastewater treatment,
converting the residual matter into fertilizer and alternative
fuels. The company is the largest in the $2 billion U.S. market.
The company also lost two major contracts in New York City
and Detroit. Synagro's Detroit contract was mired in a bribery
scandal that weighed on the public image of the company.
Zimmer said Synagro has adjusted to the loss of the New York
contract in 2010 and said the Detroit agreement never got
Carlyle brought in Evercore Partners earlier this year to
find buyers for Synagro, sources familiar with the matter told
Reuters in January.
Synagro said in court documents it had assets of between $10
million and $50 million and liabilities of between $100 million
and $500 million.
Moody's said the company defaulted on its debt earlier this
month. It said Synagro had a $290 million first-lien term loan
due in April 2014 and a $150 million second-lien term loan due
in October 2014.
Synagro was founded in 1986 and employs 800 in 34 states,
according to its website.
The bankruptcy case is Synagro Technologies Inc, U.S.
Bankruptcy Court, District of Delaware, No. 13-11041