Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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WASTE SYSTEMS INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 95-420366
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
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420 Bedford Street, Suite 300
Lexington, Massachusetts 02420
(781) 862-3000
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
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PHILIP W. STRAUSS
Chairman, Chief Executive Officer and President
WASTE SYSTEMS INTERNATIONAL, INC.
420 Bedford Street, Suite 300
Lexington, Massachusetts 02420
(781) 862-3000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
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Copies to:
THOMAS P. STORER, P.C.
GOODWIN, PROCTER & HOAR LLP
Exchange Place
Boston, MA 02109
(617) 570-1000
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement, as determined by
the Registrant.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, please check the following box. [ x ]
If this form is used to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Offering Price Per Aggregate Offering Price Registration Fee
Registered Share (1)
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Common Stock 1,500,000 (2) -- -- --
par value $0.01
Warrants 1,500,000 (3) $6.25 (4 ) $9,375,000 $2,606.25
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as amended (the
"Securities Act").
(2) Shares of common stock issuable by the registrant from time to time upon
exercise of the outstanding warrants.
(3) Outstanding warrants to purchase an aggregate of 1,500,000 shares of common
stock. The 1,500,000 warrants being registered hereby each entitle the
holder thereof to purchase one share of common stock, for an aggregate of
1,500,000 shares of common stock subject to the warrants. The outstanding
warrants, including the shares of common stock issuable upon exercise
thereof, are being registered hereby for sale from time to time by the
selling securityholders.
(4) Based on the exercise price of $6.25 per share pursuant to the terms of
issuance, in accordance with Rule 457(g) under the Securities Act.
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The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this registration statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission but has not yet been declared effective.
These securities may not be sold nor may offers to buy be accepted prior to the
time the Registration Statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there by any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
Subject to completion, preliminary prospectus dated August 4, 1999
PROSPECTUS
Waste Systems International, Inc.
1,500,000 Shares of Common Stock $0.01 par value
1,500,000 Common Stock Purchase Warrants exercisable for
an aggregate of 1,500,000 Shares of Common
Stock $0.01 par value
o The persons listed as the selling securityholders in this Prospectus are
offering to sell:
- up to 1,500,000 warrants to purchase an aggregate of 1,500,000 shares of
Waste Systems common stock, at an exercise price of $6.25 per share; or
- up to 1,500,000 shares of Waste Systems common stock, issuable upon
exercise of the warrants.
o Waste Systems's common stock is traded under the symbol "WSII" on the
Nasdaq Stock Market, Inc.'s SmallCap Market System. On August 2, 1999, the
reported closing price for the common stock was $6.50 per share.
o The selling securityholders may offer their warrants and shares from time
to time in stock exchange transactions (shares only), in privately
negotiated transactions or by a combination of these methods, directly or
indirectly through agents, and at prevailing market prices or privately
negotiated prices. See the "Plan of Distribution" section of this
prospectus.
o
WasteSystems will not receive any proceeds from the sale of warrants and shares
by the selling securityholders. We will pay substantially all of the
expenses incident to the registration of these warrants and shares, except
for the selling commissions.
o Waste Systems is an integrated non-hazardous solid waste management company
that provides waste collection, recycling, transfer and disposal services
to commercial, industrial, residential and municipal customers within some
regional markets in the Northeast and mid-Atlantic states where we operate.
o We are a Delaware corporation, with principal executive offices located at
420 Bedford Street, Suite 300, Lexington, Massachusetts 02420; our
telephone number is (781) 862-3000.
Please consider carefully the "Risk Factors" beginning
on page 7 of this prospectus.
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The information in this prospectus is not complete and may be changed. These
securities may not be sold nor may offers to buy be accepted until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the common stock, nor have any of
these organizations determined that this prospectus is accurate or complete.
Any representation to the contrary is a criminal offense.
The date of this prospectus is August 4, 1999
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TABLE OF CONTENTS
Page
FORWARD-LOOKING STATEMENTS....................................................1
PROSPECTUS SUMMARY............................................................2
THE COMPANY...................................................................3
RISK FACTORS..................................................................7
Limited Market for the Warrants..........................................7
Issuance of additional equity may be dilutive to stockholders............7
Future sales of common stock may adversely affect the market
for our common stock.....................................................7
Market conditions may reduce the trading price of our common
stock....................................................................8
We do not plan to pay dividends to our stockholders .....................9
Our history of losses makes the common stock a highly speculative
investment...............................................................9
Risks of substantial voting control by Waste Systems's management
and major stockholders...................................................9
Anti-takeover provisions.................................................9
Our high level of indebtedness could adversely affect our
financial health.........................................................10
Failure to achieve adjusted stockholders equity of at least
$40,000,000 will increase our interest expense...........................10
Incurring more debt could further exacerbate the risks of our
high level of indebtedness...............................................11
We may not generate enough cash to service our indebtedness or
our other liquidity needs................................................11
We have no control over many factors in our ability to finance
planned growth..........................................................11
Our future success depends upon our ability to manage rapid
growth in operations and personnel.......................................12
Our future success depends upon our ability to identify, acquire
and integrate acquisition targets........................................12
Loss of key executives could affect our ability to achieve Waste
Systems'business objectives..............................................12
Failed acquisitions or projects may adversely affect our results
of operations and financial condition....................................12
Our business may not succeed due to the highly competitive nature
of the solid waste management industry...................................13
Seasonal revenue fluctuations may negatively impact our operations.......13
The geographic concentration of our operations magnifies the risks
to our success...........................................................13
Potential difficulties in acquiring landfill capacity could
increase our costs.......................................................14
Failure to obtain landfill closure performance bonds and letters
of credit may adversely affect our business..............................14
Estimated accruals for landfill closure and post-closure costs
may not meet our actual financial obligations............................14
Environmental and other government regulations impose costs and
uncertainty on our operations............................................14
We are exposed to potential liability for environmental damage
and regulatory noncompliance.............................................15
Our environmental liability insurance may not cover all risks
of loss..................................................................15
Addressing local community concerns about our operations may
adversely affect our business............................................15
Year 2000 problems could have an adverse impact on our business..........15
RECENT DEVELOPMENTS...........................................................16
DESCRIPTION OF WARRANTS.......................................................20
MATERIAL TERMS OF THE SELLING SECURITYHOLDERS'TRANSACTION.....................24
SELLING SECURITYHOLDERS.......................................................25
PLAN OF DISTRIBUTION..........................................................27
USE OF PROCEEDS...............................................................29
LEGAL MATTERS.................................................................29
EXPERTS.......................................................................29
WHERE YOU MAY FIND MORE INFORMATION...........................................30
DOCUMENTS INCORPORATED BY REFERENCE...........................................30
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FORWARD-LOOKING STATEMENTS
This prospectus includes both historical and forward-looking statements.
These forward-looking statements are not facts rather, they are intentions and
expectations relating to our plans, strategies and prospects under the headings
"Prospectus Summary", "Risk Factors" and "Recent Developments." The
forward-looking statements in these sections of the prospectus can generally be
identified by our use of words such as "plan," "intend," "believe," "expect,"
and other words of similar import. Although we believe that our plans,
intentions and expectations reflected in or suggested by the forward-looking
statements are reasonable, we cannot assure you that we will achieve the plans,
intentions or expectations. We urge you to consider carefully the important
factors that could cause actual results to differ materially from the
forward-looking statements. Some of these factors are described in the section
entitled "Risk Factors" and elsewhere in this prospectus. We make all the
forward-looking statements in this prospectus only as of the date of this
prospectus, and we undertake no obligation to publicly update the
forward-looking statements to reflect subsequent events.
30
PROSPECTUS SUMMARY
This summary highlights selected information from this prospectus, but
does not contain all the information that may be important to you. This
prospectus includes or incorporates by reference information regarding our
business and the selling securityholders who are offering common stock for
resale. We encourage you to review the detailed information and data appearing
elsewhere or incorporated by reference in this prospectus. Except in discussing
our business and results of operations and where the context requires otherwise,
references in this prospectus to "we," "us," "our," "Waste Systems" or "Company"
refer to Waste Systems International, Inc., and not to any of our subsidiaries.
The term "common stock" as used in this prospectus refers to the common stock,
par value $0.01 per share, of Waste Systems International, Inc. The term
"warrants"as used in this prospectus refers to the 1,500,000 warrants issued by
Waste Systems on March 2, 1999 and currently outstanding, each of which entitles
the holder to purchase one share of common stock at a price of $6.25 per share,
exercisable after September 2, 1999. Please see the section of this prospectus
below entitled "Securities to be Offered" for a more detailed description of the
common stock and the warrants.
SECURITIES TO BE OFFERED
This prospectus relates to the offer and sale from time to time by the
persons listed in this prospectus as the selling securityholders of the
securities described below. These securities are being registered by us under
the terms of a registration rights agreement. We will pay substantially all of
the expenses incident to the registration of these shares, except for the
selling commissions.
On March 2, 1999, we completed the private offering and sale of $100.0
million principal amount of 11 1/2% Senior Notes due 2006 and warrants to
purchase an aggregate of 1,500,000 shares of common stock to the initial
purchaser, First Albany Corporation. The senior notes are guaranteed by all of
our current subsidiaries.
At the time of that private sale, we entered into a registration rights
agreement with the initial purchaser relating to the registration with the
Securities and Exchange Commission of the warrants and the common stock subject
to the warrants. Accordingly, we have filed the registration statement relating
to this prospectus, and we currently intend to cause it to be declared effective
on or prior to October 28, 1999 and to keep it effective during the effective
period prescribed in the warrant registration rights agreement. Please see the
section of this prospectus entitled "Material Terms of the Selling
Securityholders' Transaction" for a more complete description of this
transaction and our obligations under it.
Below is a summary of the securities being offered by the selling
securityholders in this prospectus:
Issuer - Waste Systems International, Inc., a corporation
organized and existing under the laws of Delaware.
Sellers - Persons listed as selling securityholders in
the section of this prospectus entitled "Selling
Securityholders." The selling securityholders may offer
their shares from time to time in stock exchange
transactions, in privately negotiated transactions or
by a combination of these methods, directly or
indirectly through agents, and at prevailing market
prices or privately negotiated prices. See the "Plan of
Distribution" section of this prospectus.
Securities Offered - 1,500,000 warrants each exercisable to purchase one
share of common stock.
- 1,500,000 shares of common stock issuable upon exercise
of the warrants.
Use of Proceeds - We will not receive any cash proceeds from the sale of
the warrants and shares of common stock. We are registering the warrants and
common stock offered by the selling securityholders solely to satisfy our
obligations under a registration rights agreement.
Warrant Terms - Exercise price: $6.25 per warrant, exercisable to purchase
one share of common stock
- Exercise period: warrants are exercisable from September 2,
1999 to March 2, 2004.
- Adjustments: warrants are subject to adjustment upon the
occurrence of certain events as provided in the Warrant
Agreement.
- For a more complete description of warrant terms, see the
section of this prospectus entitled "Description of
Warrants."
Common Stock - Exchange Listing: the common stock currently trades on the
Nasdaq Stock Market, Inc.'s SmallCap Market System under the symbol "WSII." On
August 2, 1999, the reported closing price for the common stock was $6.50 per
share.
THE COMPANY
We are an integrated non-hazardous solid waste management company that
provides waste collection, recycling, transfer and disposal services to
commercial, industrial, residential and municipal customers within some regional
markets in the Northeast and Mid-Atlantic states where we operate. We are
achieving significant growth by implementing an active acquisition strategy, and
plan to contribute to our growth by generating increased sales from existing
operations and achieving greater operating efficiencies. Waste Systems is a
Delaware corporation. Our principal executive offices are located at 420 Bedford
Street, Suite 300, Lexington, Massachusetts 02420, and our telephone number is
(781) 862-3000.
Current Integrated Operations
We currently operate, and intend to expand, regional networks of
integrated waste collection and disposal operations. These integrated networks
consist of operating landfills, waste transfer stations, and waste collection
operations.
o Waste Collection Operations
We own multiple waste collection operating subsidiaries which serve as
conduits of waste flow to our transfer stations and landfill operations. As of
June 9, 1999, our waste collection operations serve a total of approximately
72,000 commercial, industrial, residential and municipal customers in the
Vermont, Central Pennsylvania, Upstate New York and Central Massachusetts
markets. Since then we have acquired an additional waste collection and transfer
station operation servicing the Baltimore, Maryland/Washington, D.C. region, and
completed the acquisition of established waste collection and transfer station
operations in Southern New Hampshire and Eastern Massachusetts.
o Landfill Operations
We currently own four landfills, one in Vermont and three in Central
Pennsylvania. Two of these were operating in 1998, and generated approximately
20% of our 1998 revenues. Of the remaining two, one began operating in March
1999 with the acquisition of Community Refuse Service, Inc. and we expect to
begin operating the other in the fourth quarter of 1999. The aggregate remaining
estimated permitted capacity of these four owned landfills is approximately 24
million cubic yards. In addition, we have a 16-year contract with the Town of
South Hadley, Massachusetts to operate that town's landfill, subject to receipt
of required permits, which we expect to begin operating in the first quarter of
2000. The South Hadley landfill has an estimated capacity of 2.0 million cubic
yards available for future disposal.
o Transfer Station Operations
We provide transfer station services supporting one of our landfills and
have acquired another transfer station that is permitted and has begun
construction. We recently completed the acquisition of an operation that
provides both waste collection and transfer station services. We have also
recently completed the acquisition of two additional transfer stations. The
transfer stations serve as gateways of waste streams by receiving and compacting
solid waste collected by us and by third parties, which we then transfer by
long-haul trucks for disposal at landfills we operate.
The Movement of the Solid Waste Management Industry Toward Consolidation and
Integration
The solid waste management industry is undergoing general trends toward
significant consolidation and integration. We believe these trends are due
primarily to the following factors:
o stringent environmental regulations which require increased capital to
maintain regulatory compliance;
o the inability of many smaller operators to achieve the competitive
economies of scale enjoyed by larger operators;
o the competitive and economic benefits of providing integrated collection,
recycling, transfer and disposal services; and
o the privatization of solid waste landfills, transfer stations, and
collection services by municipalities.
Although significant consolidation has occurred within the solid waste
management industry, we believe the industry remains highly fragmented and that
a substantial number of potential acquisition and privatization opportunities
remain, including in the Northeast and Mid-Atlantic states where we operate.
Our Strategy to Capitalize on Industry Consolidation and Integration
We seek to acquire independent collection, transfer station and landfill
operations in appropriate locales to integrate those acquisitions into our
current operations. Our objective is to expand the geographic scope of our
operations and to become one of the leading non-hazardous solid waste management
companies in each local market that we serve. The primary elements of our
strategy for achieving these objectives are:
o Executing our acquisition program. Our acquisition program
consists of identifying regional markets and acquiring
non-hazardous solid waste disposal assets in those targeted
markets that we can operate as part of a fully integrated solid
waste management operation. To establish ourselves within a
selected market, we seek acquisitions that are consistent with
our plan to acquire long-term disposal capacity in targeted
regional markets, collection companies and transfer stations in
the targeted regions to secure a stable long-term waste flow, and
small but complementary "tuck-in" collection companies to
increase a regional operation's profitability.
o Generating internal growth. We plan to generate internal growth
from existing operations by increasing sales penetration in our
current and adjacent markets, soliciting new commercial,
industrial and residential customers, marketing upgraded services
to existing customers and, where appropriate, raising prices.
o Increasing operating efficiency. We expect to increase our
operating efficiency through implementation of an organizational
system that sets operating standards and analyzes operating
criteria of our collection, transfer, disposal and other
services.
In connection with our growth strategy, Waste Systems currently is and
at any given time will be involved in potential acquisitions that are in various
stages of exploration and negotiation, ranging from initial discussions to the
execution of letters of intent and the preparation of definitive agreements.
Some of these potential acquisitions may be material. No assurance can be given,
however, that we will be successful in completing further acquisitions in
accordance with our growth strategy, or that acquisitions, if completed, will be
successful. For a description of the risks involved in our growth strategy,
please refer to the subsections of the "Risk Factors" section of this prospectus
on page 11 beginning with "We have no control over many factors in our ability
to finance planned growth."
Our Key Strengths
Through the implementation of our growth strategy, we believe we
demonstrate the following key strengths:
o Development of Fully Integrated Operations
We continue to develop more fully integrated operations in our targeted
market areas. During 1998, over 95% of the solid waste from our Vermont
operations was delivered for disposal at our Moretown, Vermont landfill, and
approximately 40% of the solid waste delivered for disposal at the Moretown
landfill during this period was collected by us. During 1998, approximately 59%
of the solid waste from our Central Pennsylvania operations was delivered for
disposal at the Sandy Run landfill in Hopewell, Pennsylvania, and approximately
60% of the solid waste delivered for disposal at the Sandy Run landfill during
this period was collected by us. We expect to begin integration of our waste
collection operations and transfer station services in Central Massachusetts
once the South Hadley landfill is operational. We recently acquired our Upstate
New York waste collection and transfer station operations in anticipation of
landfill acquisition and privatization opportunities in that market area.
o Operating Efficiencies
We are achieving significant operating efficiencies and reducing costs
through consolidation and elimination of redundant corporate and service
functions in acquired businesses.
o Significant Disposal Capacity
We have approximately 26.0 million cubic yards of landfill capacity in
landfills we own or operate, of which 9.9 million cubic yards are fully
permitted and operating. We recently began construction on an additional 14.2
million cubic yards of landfill capacity, and 2.0 million cubic yards are
engaged in the final permitting process. This significant disposal capacity
gives us the opportunity to achieve a high degree of internalization by allowing
room for disposal of the waste streams generated by our growing collection and
transfer operations.
o Successful Acquiror and Consolidator
We believe that we have demonstrated our ability to realize value in the
fragmented solid waste management industry by completing acquisitions of three
landfills, five transfer stations, and 41 solid waste collection operations in
the Northeast and Mid-Atlantic regions since January 1998. Please see the
section of this prospectus entitled "Recent Developments" beginning on page 16
for a more complete description of our current activities. We have been
effective in executing our acquisition program to expand our solid waste assets
in our targeted regional markets at prices we believe will provide opportunities
for increased profits and flexibility in operations. As a result of executing
our acquisition program, we have realized significant growth in revenue and
earnings before interest, taxes, depreciation and amortization or EBITDA, which
we believe is a measure commonly used by lenders and some investors to evaluate
a company's performance in our industry.
o Strong Management Team
Our management team has a demonstrated track record of identifying,
acquiring, integrating and operating non-hazardous solid waste disposal assets.
Our executives and operation managers average 13.2 years of experience in the
solid waste disposal industry. In addition, senior management owns a significant
equity stake in Waste Systems, which motivates them to achieve our objectives to
maximize the value of their Waste Systems stock.
Risk Factors
You should consider carefully all of the information set forth in this
prospectus and, in particular, the specific factors set forth under the "Risk
Factors" section beginning on page 7 before deciding to invest in the securities
being offered in this prospectus.
RISK FACTORS
In addition to the other information contained or incorporated by
reference in this prospectus, you should consider the following factors
carefully in evaluating an investment in the warrants and the shares of common
stock offered by this prospectus.
Limited Market for the Warrants
We do not intend to list the warrants for quotation on any stock
exchange. If the warrants are traded after their initial resale, they may trade
at a discount from their initial offering price, depending upon prevailing
interest rates, the market for similar securities, the financial condition of
the Company and other factors beyond our control, including general economic
conditions. Accordingly, investors deciding whether or not to purchase any
warrants should take into account the potentially illiquid nature of an
investment in the warrants.
Issuance of additional equity may be dilutive to stockholders.
Future issuance of additional equity by us may dilute the interest of
our existing stockholders. We currently have:
o up to 1,500,000 shares of common stock issuable upon exercise of
the warrants offered for resale in this prospectus;
o up to 4,955,143 shares of common stock issuable upon conversion
of our 7% Convertible Subordinated Notes outstanding as of June
30, 1999, which are convertible at $10 per share at any time by
the holders of the notes, and by us if the closing price of the
common stock after May 13, 2000 remains above $10 per share for
twenty consecutive trading days;
o up to 1,576,292 shares of our common stock issuable upon
conversion, which is subject to stockholder approval, of the 894
shares of our Series C Preferred Stock issued to former
stockholders of Eastern Trans-Waste of Maryland, Inc. as
consideration in our recently completed acquisition of that
company;
o up to 3,175,768 shares of common stock issuable upon exercise of
options outstanding as of June 30, 1999 under our stock option
plans, subject to vesting requirements, at prices ranging from
$1.41 to $9.25; and
o an additional 824,232 shares of common stock reserved for
issuance as of June 30, 1999 under our stock option plans.
In addition, on July 30, 1999, we completed an initial closing of a
private placement in which we issued 571,429 shares of common stock for
aggregate consideration of $4 million, and on August 2, 1999 we completed a
subsequent closing of the private placement in which we issued an additional 1
million shares of common stock for aggregate additional consideration of $7
million. The proceeds from the private placement will be used for potential
future acquisitions and general working capital purposes. We anticipate holding
additional subsequent closings under the private placement for the issuance of
up to an additional 1,285,714 shares, for a total of 2,857,143 shares and gross
total private placement proceeds of $20 million. Finally, our ability to achieve
our business objectives depends on our use of a blend of debt financing and
equity financing appropriate for executing our business strategy. To the extent
that additional equity securities are issued to finance future acquisitions
instead of issuing additional debt, the interests of our existing stockholders
will be diluted.
Future sales of common stock may adversely affect the market for our common
stock.
Stockholders may be adversely affected by future sales of common stock
by other stockholders. If any of our larger stockholders sell substantial
amounts of our common stock eligible for resale in the public market after this
offering, the market price of our common stock could fall. Such sales may also
make it more difficult for us in the future to sell equity or equity-related
securities in the public market, whether for the purpose of general corporate
financing or for use as consideration in an acquisition, at a time and at a
price that we deem appropriate.
Upon completion of this offering, we will have 13,405,394 shares of our
common stock outstanding (based on the number of shares outstanding as of June
30, 1999 and assuming no exercise of outstanding stock options after that date).
Of these shares, 6,348,768 shares are freely tradable without restriction under
the Securities Act of 1933 (the "Securities Act"). Also, 7,512,548 shares are
currently eligible for sale in the public market subject to compliance with the
volume and other limitations of Rule 144 under the Securities Act, and 455,922
shares will become eligible for sale at various times after the date of this
prospectus under Rule 144.
In addition, we have already registered for resale:
o up to 4,955,143 shares of common stock issuable upon conversion
of our 7% Convertible Subordinated Notes at any time by the
holders of the notes; and
o up to 2,244,109 shares of common stock for resale by stockholders
who received those shares in exchange for a portion of their 7%
Convertible Subordinated Notes (see the section of this
prospectus entitled "Recent Developments--Exchange of Common
Stock for 7% Convertible Subordinated Notes due 2005" for a more
complete description of this transaction);
o 4,000,000 shares of common stock reserved for issuance under our stock option
plans.
In addition, we currently intend to register:
o warrants to purchase an aggregate of 1,500,000 shares of common
stock at an exercise price of $6.25 per share, and the common
stock issuable upon exercise of those warrants, for resale by the
holders (see the section of this prospectus entitled "Recent
Developments--Senior Notes Offering" for a more complete
description of the private placement and related registration
rights);
o up to 2,678,620 shares of our common stock issued to former
stockholders of Eastern Trans-Waste of Maryland, Inc. as a
portion of the consideration we paid in our recently completed
acquisition of that company, under a registration rights
agreement with its sellers;
o up to 1,576,292 shares of our common stock issuable upon
conversion, which is subject to stockholder approval, of the 894
shares of our Series C Preferred Stock issued to former
stockholders of Eastern Trans-Waste of Maryland, Inc. as
consideration in our recently completed acquisition of that
company, under a registration rights agreement with its sellers;
and
o up to 2,857,143 shares of common stock for resale by stockholders
who receive those shares in our recent private placement (see the
section of this prospectus entitled "Recent Developments--Private
Placement of Common Stock" for a more complete description of
this transaction).
Market conditions may reduce the trading price of our common stock
The market price of our common stock has historically experienced and
may continue to experience high volatility. Our quarterly operating results,
changes in general conditions in the economy or the financial markets and other
developments affecting us or our competitors could cause the market price of our
common stock to fluctuate substantially. In addition, in recent years, the stock
market has experienced significant price and volume fluctuations. This
volatility has affected the market prices of securities issued by many companies
for reasons unrelated to their operating performance and may adversely affect
the price of our common stock.
We do not plan to pay dividends to our stockholders
We have never declared or paid a cash dividend on our common stock. We
intend to retain earnings to repay debt and to finance the growth and
development of our business and do not anticipate paying cash dividends on our
common stock in the foreseeable future. Any declaration of dividends in the
future will depend, among other things, upon our results of operations,
financial condition and capital requirements as well as general business
conditions. Our outstanding debt securities also contain restrictions which
prohibit us from making dividend payments to our stockholders.
Our history of losses makes the common stock a highly speculative investment.
From Waste Systems's inception through March 31, 1999, we have had
aggregate net losses of approximately $43.9 million on aggregate revenues of
approximately $36.2 million and had an accumulated loss from operations of $26.0
million. Following Waste Systems's restructuring in 1996, we directed our focus
on becoming an integrated solid waste management company by implementing a
business strategy based on aggressive growth through acquisitions. Our ability
to become profitable and to maintain profitability as we pursue our business
strategy will depend upon several factors, including our ability to:
o execute our acquisition strategy and expand our revenue generating
operations while maintaining or reducing our proportionate administrative
expenses;
o locate sufficient financing to fund acquisitions; and
o adapt to changing conditions in the competitive market in which we operate.
External factors, such as the economic and regulatory environments in which we
operate will also have an effect on our business and its profitability. However,
continued losses and negative cash flow may not only prevent us from achieving
our strategic objectives, it may also limit our ability to meet financial
obligations.
Risks of substantial voting control by Waste Systems's management and major
stockholders.
As of June 30, 1999, Waste Systems's directors, executive officers and
their affiliates and other major stockholders --those holding 5% or more of the
common stock -- beneficially owned approximately 86.5% of the outstanding shares
of common Stock. Accordingly, these stockholders are considered to have a
controlling influence over the election of directors and other corporate and
stockholder actions.
Anti-takeover provisions.
Applicable sections of the Delaware General Corporation Law and our
charter and by-laws may have an anti-takeover effect and discourage takeover
attempts not first approved by our Board of Directors (including takeovers which
our stockholders may consider to be in their best interests). Such provisions
include:
o Section 203 of the Delaware General Corporation Law which, in
general, imposes restrictions upon certain acquirors (including
their affiliates and associates) of 15% or more of our common
stock;
o a charter provision giving our Board of Directors the ability to
issue shares of preferred stock and to establish the voting
rights, preferences and other terms of preferred stock without
further action by stockholders;
o a charter provision limiting the removal of directors only for
cause and requiring for such removal the approval of at least
two-thirds of the votes eligible to be cast by stockholders in
the election of such director;
o a by-law provision vesting exclusive authority in the Board of
Directors to determine the size of the Board of Directors and,
subject to limited exceptions, to fill any Board vacancies;
o a by-law provision vesting exclusive authority in the Board of
Directors to call special meetings of stockholders; and
o a by-law provision requiring advance notice for stockholder
proposals and nominations for election to the Board of Directors.
These statutory, charter and by-law provisions could delay or frustrate the
removal of incumbent directors or the assumption of control by stockholders,
even if such removal or assumption of control would be beneficial to
stockholders. These provisions also could discourage or make more difficult a
merger, tender offer or proxy contest, even if such events would be beneficial
to the interest of stockholders.
Our high level of indebtedness could adversely affect our financial health.
We currently have a high level of indebtedness relative to stockholders'
equity. The following tables illustrate our level of indebtedness and ratio of
earnings to fixed charges:
As of March 31, 1999
(dollars in thousands)
Long-term indebtedness..................... $ 152,057
Stockholders' equity....................... $ 5,892
Debt to equity ratio....................... 25.7:1
Our high level of indebtedness could:
o limit our flexibility in planning for, or reacting to, changes in business,
industry and economic conditions;
o require us to dedicate a substantial portion of our cash flow from
operations to repaying indebtedness, thereby reducing the availability of
our cash flow to fund working capital, capital expenditures and other
general corporate purposes;
o place us at a competitive disadvantage compared to our competitors with
lower levels of indebtedness; and
o limit our ability to borrow additional funds because of a potential
lender's limits on borrower indebtedness.
Our high level of indebtedness may have a direct negative impact on our
operations. It may also result in an event of default under our debt instruments
which, if not cured or waived, could have a material adverse effect on our
finances.
<TABLE>
<S> <C> <C> <C>
For the three For the Years Ended
months ended December 31,
March 31, 1999 1998 1997
-------------- ---- ----
Ratio of earnings to fixed charges...................... N/A N/A N/A
</TABLE>
For the three months ended March 31, 1999, we incurred net losses that
did not cover fixed charges by approximately $8.8 million; for the year ended
December 31, 1998, we incurred net losses that did not cover fixed charges by
approximately $6.6 million; and for the year ended December 31, 1997, we
incurred net losses that did not cover fixed charges by approximately $5.5
million. For purposes of computing this financial relationship of earnings to
fixed charges, earnings consist of pretax income (loss) from continuing
operations plus fixed charges. Fixed charges consist of interest expense and
financing costs, including capitalized interest and amortization of deferred
financing costs, and an estimated portion of rentals representing interest
costs.
Failure to achieve adjusted stockholders equity of at least $40,000,000 will
increase our interest expense.
We must increase the interest rate payable on the senior notes to 13%,
14% and 15% per year if we do not achieve an Adjusted stockholders' equity, as
defined below, of at least $40,000,000 on each of December 31, 1999, June 30,
2000, and December 31, 2000, respectively. "Adjusted stockholders' equity" means
our stockholders' equity as shown on our consolidated balance sheets filed as
part of our regular reports with the Securities and Exchange Commission, less
the amount of any increase resulting from the issuance of shares of common stock
in exchange for our outstanding 7% Convertible Subordinated Notes, to the extent
that the issuance exceeds 2,343,646 shares of common stock in the aggregate.
Incurring more debt could further exacerbate the risks of our high level of
indebtedness.
Despite our current high level of indebtedness, we may incur additional
indebtedness to fund acquisitions, for general working capital purposes or for
other reasons. On July 22, 1999, we entered into a revolving credit facility
with BankNorth Group, N.A. to fund acquisitions and for general working capital.
While no credit has been drawn on this facility to date, the agreement provides
for up to $25 million in secured debt that is guaranteed by our subsidiaries. If
other new debt is added to our current level of debt, the related risks of
indebtedness could intensify for us.
We may not generate enough cash to service our indebtedness or our other
liquidity needs.
Our ability to make payments on and to refinance our indebtedness and to
fund planned capital expenditures will depend on our ability to generate cash in
the future. This ability depends in part on our operating performance and the
execution of our business strategy. It is also subject to influence by general
economic, financial, competitive, legislative, regulatory and other factors that
are beyond our control.
We cannot assure you that our business will generate sufficient cash
flow from operations, that we will realize anticipated cost savings from
operating efficiency improvements, or that we will be able to obtain future
financing in amounts sufficient to enable us to pay our indebtedness, or to fund
our other liquidity needs.
The following table outlines the schedule of our required debt
amortization payments:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
March 31, Principal Payments Due During
1999 1999 2000 2001 2002 2003 2004 2005 2006 Remainder Total
---- ---- ---- ---- ---- ---- ---- ---- ---- --------- -----
(dollars in thousands)
Long-Term Debt
Bank Credit Facility.. - - - - - - - - - - -
Capital Leases,
Equipment and Other
Notes Payable....... $ 2,106 $ 216 $ 281 $ 306 $ 334 $ 282 $ 139 $ 153 $ 169 $ 226 $ 2,106
Senior Notes.......... 100,000 - - - - - - - 100,000 - 100,000
10% Convertible
Subordinated Debentures 400 - 400 - - - - - - - 400
7% Convertible
Subordinated Notes.. 49,551 - - - - - - 49,551 - - 49,551
-------- ------ ------ ------- ------ ------ ------- ------- -------- ------- --------
Total........ $152,057 $ 216 $ 681 $ 306 $ 334 $ 282 $ 139 $49,704 $100,169 $ 226 $152,057
======== ====== ====== ======= ====== ====== ======= ======= ======== ======= ========
</TABLE>
We may need to refinance all or a portion of our indebtedness on or
before maturity. We cannot assure you that we will be able to refinance any
of our indebtedness on commercially reasonable terms or at all.
We have no control over many factors in our ability to finance planned
growth.
We require substantial funds to complete and bring to commercial
viability all of our currently planned projects. We also anticipate that
future business acquisitions will be financed not only through cash from
operations and the proceeds from previous debt offerings, but also by
future borrowings under bank credit facilities, offerings of Waste Systems
stock as consideration for acquisitions, or from the proceeds of additional
equity or debt financings. Therefore, our ability to satisfy our future
capital and operating requirements for planned growth is dependent on a
number of pending or future financing activities, and we cannot assure you
that any of these financing activities will be successfully completed.
Our future success depends upon our ability to manage rapid growth in operations
and personnel.
Our objective is continued growth by expanding our services in selected
markets where we can be one of the largest and most profitable fully-integrated
solid waste management companies. Accordingly, we may experience periods of
substantial rapid growth. This growth could place a significant strain on our
operational, financial and other resources. Any failure to expand our
operational and financial systems and controls in an efficient manner at a pace
consistent with our growth could have a material adverse effect on our business,
financial condition and results of operations.
Our future success is also highly dependent upon our continuing ability
to identify, hire, train and motivate a sufficient number of highly qualified
personnel for our planned growth. We face competition for recruiting qualified
personnel from our competitors, other companies not in the waste management
industry, government entities and other organizations. We cannot assure you that
we will be successful in attracting and retaining qualified personnel as
required for our present and future planned operations. Our inability to attract
and retain a sufficient number of qualified personnel could have a material
negative impact on our business, financial condition and results of operations.
Our future success depends upon our ability to identify, acquire and integrate
acquisition targets.
Our future success is highly dependent upon our continued ability to
successfully identify, acquire and integrate additional solid waste collection,
recycling, transfer and disposal businesses. As the solid waste management
industry continues to consolidate, competition for acquisition candidates within
the industry increases and the availability of suitable candidates on terms
favorable to us may decrease. We compete for acquisition candidates with larger,
more established companies that may have significantly greater capital resources
than we do, which can further decrease the availability of suitable acquisition
candidates at prices affordable to us. We cannot assure you that we will be able
to identify suitable acquisition candidates, to successfully negotiate
acquisitions on terms reasonable to us given our resources, to obtain financing
for those targets on favorable terms, or to successfully integrate any acquired
targets with our current operations.
We believe that a significant factor in our ability to consummate
acquisitions will be the attractiveness of our common stock as consideration for
potential acquisition targets. This attractiveness may be, in large part,
dependent upon the relative market price and capital prospects of our equity
securities as compared to the equity securities of our competitors. Our stock is
traded on the Nasdaq Stock Market, Inc.'s SmallCap Market, while some of our
competitors' stock is traded on larger, more recognized markets. In addition,
some of our competitors have a significantly larger capitalization than we do,
which generally results in a more liquid market for their publicly traded
securities. If the market price of our common stock were to decline, we might be
unable to use our common stock as consideration for future acquisitions.
Loss of key executives could affect our ability to achieve Waste Systems'
business objectives.
We depend to a high degree on the services of Philip Strauss, Chairman,
Chief Executive Officer and President, and Robert Rivkin, Director, Executive
Vice President_Acquisitions, Chief Financial Officer, Secretary and Treasurer,
in planning to achieve our business objectives. We have obtained $1 million key
executive insurance policies for each of Messrs. Strauss and Rivkin. However, if
we lost the services of either of these executives, our business, financial
condition and results of operations could suffer material adverse effects.
Failed acquisitions or projects may adversely affect our results of operations
and financial condition.
In accordance with generally accepted accounting principles, we record
some expenditures and advances relating to acquisitions, pending acquisitions
and landfill projects as assets on our balance sheet, then amortize or
depreciate these capitalized expenditures and advances over time, usually
matching an asset's depreciation against the revenues it generates. We also have
an accounting policy to record as an expense in the current accounting period
all unamortized capital expenditures and advances relating to any operation that
is permanently shut down, any acquisition that will not be consummated, and any
landfill project that is terminated. As a result of these accounting practices,
we may have to record the entire capitalized expenditure of any failed
acquisition or terminated project as a charge against earnings in the accounting
period in which the failure or termination occurs. A large, unexpected expense
against typical earnings could have a material adverse effect on our results of
operations, financial condition and our business.
Our business may not succeed due to the highly competitive nature of the solid
waste management industry.
The solid waste management industry is highly competitive and
fragmented, and solid waste management operations require substantial labor and
capital resources. Competition exists for collection, recycling, transfer and
disposal service customers, as well as for acquisition targets. The markets we
compete in or are likely to compete in usually are served by one or more
national, regional or local solid waste companies who may have a respected
market presence, and who may have greater financial, marketing or technical
resources than those available to us. Competition for waste collection and
disposal business is based on price, the quality of service and geographical
location. From time to time, competitors may reduce the price of their services
in an effort to expand or maintain market share or to win competitively bid
contracts.
We also compete with counties, municipalities and operators of
alternative disposal facilities that operate their own waste collection and
disposal facilities. The availability of user fees, charges or tax revenues and
the availability of tax-exempt financing may provide a competitive advantage to
public sector competitors in solid waste management. Additionally, alternative
disposal facilities such as recycling and incineration may reduce the demand for
the landfill-based solid waste disposal services that we provide and on which
our strategy is based. We cannot assure you that we will be able to remain
competitive with our larger and better capitalized private competitors or with
tax-advantaged public sector operators.
Seasonal revenue fluctuations may negatively impact our operations.
Our revenues and results of operations tend to vary seasonally. We tend
to have lower revenues in the winter months of the fourth and first quarters of
the calendar year than in the warmer months of the second and third quarters.
The primary reasons for lower revenues in the winter months include:
o harsh winter weather conditions that interfere with collection and
transportation activities;
o the volume of winter month waste in our operating regions is generally
lower than that which occurs in warmer months; and
o the construction and demolition activities which generate landfill waste
are primarily performed in the warmer seasons.
We believe that the seasonality of the revenue stream will not have a material
adverse effect on our business, financial condition and results of operations on
an annualized basis. Still, higher warm weather revenues may not offset lower
cold season revenues, and seasonal revenue fluctuations may make it more
difficult to manage and finance our business successfully.
The geographic concentration of our operations magnifies the risks to our
success.
Waste Systems has established solid waste management operations in
Central Pennsylvania, Vermont, Upstate New York and central Massachusetts. Since
our current primary source of revenues will be concentrated in these geographic
locations, our business, financial condition and results of operations could be
materially affected by downturns in these local economies, severe weather
conditions in these regions, and state and local regulations. Factors that have
a greater impact on our selected markets than on other regions of the country
are more likely to have a negative effect on our business than on our larger
regional and national competitors in the waste management industry.
Industry consolidation in our operating regions has also increased the
competition for customers who generate waste streams. This may make it
increasingly difficult to expand operations within our selected markets. We
cannot assure you that we will be able to continue to increase the local waste
streams to our operating landfills or be able to expand our geographic markets
to mitigate the effects of adverse economic events that may occur in these
regions. As a result of our geographic concentration, we are exposed to a higher
degree of risks than our geographically more diverse competitors.
Potential difficulties in acquiring landfill capacity could increase our costs.
Our operations depend on our ability to expand the landfills we own or
operate and to develop or acquire new landfill sites. We cannot assure you that
we will be successful in obtaining new landfill sites or expanding the permitted
capacity of our existing landfills. The process of obtaining required permits
and approvals to open new landfills, and to operate and expand existing
landfills has become increasingly difficult and expensive. The process can take
several years and involves hearings and compliance with zoning, environmental
and other requirements. We cannot assure you that we will be successful in
obtaining and maintaining required permits to open new landfills or expand the
existing landfills we own or operate.
Even when granted, final permits to expand landfills are often not
approved until the remaining capacity of a landfill is very low. In the event we
exhaust our permitted capacity at one of our landfills, our ability to expand
internally will be limited and we will be required to cap and close that
landfill. Furthermore, as the solid waste management industry continues to
consolidate, there will be greater competition for potential landfill
acquisitions. As a result of insufficient landfill capacity, we could be forced
to transport waste greater distances to our own landfills that have capacity, or
to dispose of waste locally at landfills operated by our competitors. In either
case, the additional costs we would incur could have a material adverse effect
on our business.
Failure to obtain landfill closure performance bonds and letters of credit may
adversely affect our business.
We may be required to post a performance bond, surety bond or letter of
credit to ensure proper closure and post-closure monitoring and maintenance at
some of our landfills and transfer stations. Our failure to obtain performance
bonds, surety bonds or letters of credit in sufficient amounts or at acceptable
rates may have a material adverse effect on our business, financial condition
and results of operations.
Estimated accruals for landfill closure and post-closure costs may not meet our
actual financial obligations.
The closure and post-closure costs of our existing landfills and any
landfill we may own or operate in the future represent material financial
obligations. To meet these future obligations, we estimate and accrue closure
and post-closure costs based on engineering estimates of landfill usage and
remaining landfill capacity. We cannot assure you that the amount of funds
estimated and accrued for landfill closure and post-closure costs will be enough
to meet these future financial obligations. Any failure to meet these
obligations when they become due, or any use of significant funds to cover a gap
between such accruals and actual landfill closure and post-closure costs
incurred, may have a material adverse effect on our business, financial
condition and results of operations.
Environmental and other government regulations impose costs and uncertainty on
our operations.
We and our customers operate in a highly regulated environment, and our
landfill projects in particular usually will require federal, state and local
government permits and environmental approvals. Maintaining awareness of and
attempting to comply with applicable environmental legislation and regulations
require substantial expenditures of our personnel and financial resources. These
efforts, however, do not guarantee that we will meet all of the applicable
regulatory criteria necessary to obtain required permits and approvals.
Government regulators generally have broad discretion to deny, revoke,
or modify regulatory permits or approvals under a wide variety of circumstances.
In addition, government regulators may adopt new environmental legislation or
regulations or amend existing legislation, and may interpret or enforce existing
legislation in new ways. All of these circumstances may require us or our
customers to obtain additional permits or approvals.
Any delay in obtaining required regulatory permits or approvals may
delay our ability to obtain project financing, thereby increasing our need to
invest working capital in projects before obtaining more permanent financing.
These delays may also reduce our project returns by deferring the receipt of
project revenues to a later project completion date. If we are required to
cancel any planned project because we were unable to obtain required permits or
as a result of any other regulatory impediments, we may lose any investment we
have made in the project up to that point. The cancellation, or any substantial
delay in completion, of any project may have a significant negative effect on
our financial condition and results of operations.
We are exposed to potential liability for environmental damage and regulatory
noncompliance.
We are engaged in the collection, transfer and disposal of waste
described as non-hazardous, and we believe that we are currently in material
compliance with all applicable environmental laws. Despite these circumstances,
if harmful substances escape into the environment and cause damages or injuries
as a result of our operating activities, we are exposed to the risk that we will
be held liable for any damages and injuries, as well as for significant fines
for regulatory noncompliance.
Our environmental liability insurance may not cover all risks of loss.
We maintain environmental impairment liability insurance covering
particular claims for the sudden or gradual onset of environmental damage to the
extent of $5 million per landfill. If we were to incur liability for
environmental damage in excess of our insurance limits, our financial condition
could be adversely affected. We also carry a comprehensive general liability
insurance policy, which management considers adequate at this time to protect
our assets and operations from other risks.
Addressing local community concerns about our operations may adversely affect
our business.
Members of the public in the communities where we do business could
raise concerns with government regulators and others about the effects on their
communities of our existing or planned operations and, in some areas, the
proposed development of solid waste facilities. These concerns cannot always be
anticipated, and our attempts to address these concerns may result in unforseen
delays, costs and litigation that could adversely affect our ability to achieve
our business objectives.
Year 2000 problems could have an adverse impact on our business.
We utilize and are dependent upon general accounting and
industry-specific customer information and billing software to conduct our
business that are likely to be affected by the date change in the year 2000.
This purchased software is run on in-house computer networks. In addition,
embedded technology that is contained in a substantial number of our items of
hauling, disposal and communications equipment may be affected by the date
change in the year 2000. We have initiated a review and assessment of all
hardware, software and related technologies to determine whether it will
function properly in the year 2000. We currently believe that costs associated
with the compliance efforts will not have a significant impact on our ongoing
results of operations, although we cannot assure you in this regard. Computer
software and related technologies used by our customers, service providers,
vendors and suppliers are also likely to be affected by the year 2000 date
change. To date, those vendors which have been contacted have indicated that
their hardware or software is or will be year 2000 compliant in time frames that
meet our requirements. We have also initiated communications with our
significant suppliers regarding the year 2000 issue. However, we cannot assure
you that the systems of such suppliers, or of customers, will be year 2000
compliant. Failure by us or any of the parties mentioned above, to properly
process dates for the year 2000 and thereafter could result in unanticipated
expenses and delays to us, including delays in the payment by our customers for
services provided.
RECENT DEVELOPMENTS
Senior Notes Offering.
Senior Notes Offering and Use of Proceeds. On March 2, 1999, we
completed a private placement of $100.0 million principal amount of 11 1/2%
Senior Notes due 2006 and warrants to purchase an aggregate of 1,500,000 shares
of common stock at an exercise price of $6.25 per share. The net proceeds to
Waste Systems from the sale of the senior notes and warrants, after deducting
the discount to the initial purchaser and related issuance costs, were
approximately $97.3 million. We used a portion of the proceeds from the offering
to repay the $20.0 million of Waste Systems's 13% short term notes due June 30,
1999. The $10.0 million BankNorth Group, N.A. credit facility and approximately
$1.7 million of capital leases and other notes payable were paid with the
proceeds. Also, we redeemed approximately $1.45 million principal amount of
Waste Systems' 10% convertible subordinated debentures due October 6, 2000 and
completed several acquisitions as further described below. A portion of the
balance of the proceeds has been used for general corporate purposes. The
remainder will be used for possible future acquisitions and/or working capital.
In connection with the offering of the senior notes and warrants, we
entered into a registration rights agreement with the initial purchaser. This
registration rights agreement requires us to exchange the senior notes for newly
issued registered 11 1/2% Series B Senior Notes due 2005. We filed an exchange
offer registration statement with the Securities and Exchange Commission (File
No. 333-81341), which was declared effective on July 13, 1999. Under the senior
notes registration rights agreement, if we fail to complete the exchange offer
by October 28, 1999, we must increase the annual interest rate payable on the
originally issued senior notes by 0.50% until the exchange offer is completed.
We currently intend to complete the exchange offer on or about August 13, 1999.
The registration rights agreement also requires us to register for
resale the senior notes held by our affiliates or other persons ineligible to
participate in the exchange offer under the interpretations of the Securities
and Exchange Commission of applicable federal securities rules. Under the senior
notes registration rights agreement, if we fail: (a) to file the registration
statement for the resale of those senior notes by August 27, 1999; or (b) to
cause the registration statement to be declared effective or prior to October
28, 1999; or (c) to keep the registration statement effective during the
prescribed effective period; then we must increase the annual interest rate
payable on the originally issued senior notes by 0.50% until the registration
statement is filed or declared or made effective, as applicable. It is our
current understanding that an affiliate of Waste Systems holds senior notes.
Accordingly, we currently intend to file with the Securities and Exchange
Commission a shelf registration statement to register for resale those senior
notes and to cause it to be declared effective prior to the deadlines described
above, and to keep it effective during the prescribed effective period.
When we offered the senior notes, we also offered warrants to purchase
1,500,000 shares of common stock. We also entered into a registration rights
agreement with the initial purchaser relating to registration of those warrants.
The warrants registration rights agreement requires us to register for resale
those warrants and any common stock that is issuable upon exercise of the
warrants. We are satisfying this obligation by filing with the Securities and
Exchange Commission the registration statement of which this prospectus forms a
part, and we intend to keep it effective during the prescribed effective period.
Please see the section of this prospectus entitled "Material Terms of the
Selling Securityholders' Transaction" for a more complete description of this
transaction and our obligations under it.
Summary of Terms of the Warrants. The warrants are exercisable from
September 2, 1999, through March 2, 2004. The number of shares for which, and
the price per share at which, a warrant is exercisable, are subject to
adjustment upon the occurrence of events specified in the warrant agreement.
Summary of Terms of the Senior Notes. The senior notes mature on January
15, 2006, and accrue interest at the rate of 11 1/2% per annum, payable
semi-annually in arrears on July 15 and January 15 of each year, commencing July
15, 1999. The senior notes are guaranteed by all of our current subsidiaries.
When the senior notes were sold, Waste Systems and its subsidiaries
entered into a registration rights agreement with the initial purchaser in which
we agreed to effect an exchange offer for a new series of Senior Notes on or
before October 28, 1999. On July 14, 1999, we began an exchange offer in which
holders of outstanding senior notes will be entitled to exchange senior notes
for a like principal amount of registered 11 1/2% Series B Senior Notes due 2006
that have substantially identical terms as the originally issued senior notes.
Any senior notes initially issued that remain outstanding and not exchanged
after the consummation of the exchange offer will be treated the same under the
indenture as the new senior notes issued in the senior notes exchange offer.
In accordance with the senior notes indenture, we must increase the
interest rate payable on the senior notes to 13%, 14% and 15% per year if we do
not achieve an adjusted stockholders' equity of at least $40,000,000 on December
31, 1999, June 30, 2000, and December 31, 2000, respectively. "Adjusted
stockholders' equity" means our stockholders' equity as shown on our
consolidated balance sheets filed as part of our regular reports with the
Securities and Exchange Commission, less the amount of any increase therein
resulting from the issuance of shares of common stock in exchange for
outstanding 7% convertible subordinated notes, to the extent, if any, that such
issuance exceeds 2,343,646 shares of common stock in the aggregate.
The senior notes and the subsidiary guarantees:
o are senior unsecured obligations;
o rank equally in right of payment with all other existing and
future senior unsecured obligations of Waste Systems and the
subsidiary guarantors, and senior in right of payment to the
holders of equity securities of Waste Systems; and
o are effectively subordinated to all of our and our subsidiary
guarantor's secured debt, including amounts outstanding under our
credit facility and capital lease obligations, to the extent of
the value of the assets securing such loan.
The senior notes are guaranteed on a senior unsecured basis by all of
our wholly owned subsidiaries, which conduct substantially all of the operations
of our business. The subsidiary guarantees are joint and several obligations of
the subsidiary guarantors. All of our subsidiary guarantors are considered
restricted subsidiaries under the indenture. Subject to the requirements of the
indenture, Waste Systems will be permitted to designate current or future
subsidiaries as unrestricted subsidiaries, which will not be subject to many of
the restrictive covenants in the indenture applicable to the subsidiary
guarantors.
After March 2, 2003, we may redeem the senior notes at any time at the
redemption price fixed by the indenture, together with accrued and unpaid
interest. In addition, we may at any time purchase senior notes in the open
market or otherwise at any price. Any senior notes that are redeemed or
purchased by us will be canceled and may not be reissued or resold.
Upon the occurrence of an event considered a "change of control" of
Waste Systems, holders of senior notes will have the right to sell back to us
all Senior Notes at a price equal to 101% of their aggregate principal amount,
together with accrued and unpaid interest, if any, to the date of such sale.
The senior note indenture limits our ability and the ability of our
guarantor subsidiaries to:
o incur additional indebtedness;
o pay dividends on or redeem our capital stock;
o issue capital stock of our subsidiaries;
o make investments;
o create liens;
o issue guarantees;
o engage in transactions with affiliates;
o sell assets; and
o conduct certain mergers and consolidations.
Exchange of Common Stock for 7% Convertible Subordinated Notes due 2005.
On March 31, 1999, we completed a private exchange offer in which we
issued a total of 2,244,109 shares of common stock in exchange for $10,449,000
aggregate principal amount of the outstanding 7% Convertible Subordinated Notes
due May 13, 2005 previously issued in a private placement. The exchange price
per share of $4.656 was equal to the closing price of our common stock on the
Nasdaq SmallCap Market as reported by NASDAQ on March 31, 1999. Accrued but
unpaid interest on the notes exchanged was paid in cash. As a result of the
private exchange offer, we retired $10,449,000 of our 7% Convertible
Subordinated Notes. The remaining 7% Convertible Subordinated Notes are
convertible by holders into common stock at $10.00 per share.
To conduct the private exchange offer, we also entered into exchange
agreements with each of the participating note holders. In the exchange
agreements, we agreed to register for resale the shares of common stock issued
in the private exchange offer, or an aggregate of 2,244,109 shares of common
stock. We filed a registration statement with the Securities and Exchange
Commission relating to the resale of those shares of common stock (File No.
333-[ ]) on August 5, 1999.
Stock Repurchase.
With the proceeds from the private offering of senior notes, Waste
Systems repurchased 497,778 shares of its common stock from the Federal Deposit
Insurance Corporation for an aggregate purchase price of approximately $2.8
million.
Acquisitions.
From January 1, 1999 to May 1, 1999, Waste Systems completed eleven
acquisition, consisting of eight collection operations, one transfer station and
one landfill. The aggregate purchase price for these acquisitions was
approximately $42.1 million which was paid in cash and by the assumption of
approximately $3 million of debt. These acquisitions have combined annual
revenue of approximately $12.0 million. The acquisitions have all been recorded
using the purchase method of accounting.
On August 3, 1999, we completed the acquisition of the assets of C&J
Trucking, Inc. and affiliates, with collection operations throughout Eastern
Massachusetts and Southern New Hampshire. The acquired assets also include two
transfer stations located in Lynn, Massachusetts and Londonderry, New Hampshire,
which are initially expected to handle in excess of 1,000 tons of waste per day.
On July 6, 1999, we acquired Eastern Trans-Waste of Maryland, Inc., a
well-established commercial and industrial collection operation servicing the
Baltimore, Maryland and Washington, D.C. region. Its operations include a 53,000
square foot transfer station located in Washington, D.C., which is permitted to
operate twenty-four hours per day with no capacity restrictions. As part of its
customer base, Eastern Trans-Waste serves the White House and numerous federal
agencies. The total purchase price for these acquisitions is approximately $70
million, in cash and stock. The consideration paid to former stockholders of
Eastern Trans-Waste of Maryland, Inc. includes 2,678,620 shares of common stock
and 894 shares of newly designated Series C Preferred Stock that is
automatically convertible, upon stockholder approval, into 1,576,292 shares of
common stock, subject to adjustment in the event of a stock dividend,
subdivision or combination of Waste Systems' common stock or a capital
reorganization, merger or consolidation of Waste Systems or the sale of all or
substantially all of Waste Systems' assets. The Series C Preferred Stock has
substantially the same terms as the common stock, other than: (1) a liquidation
preference equal to $11,615 per share, subject to adjustment, and (2) a per
share put right, exercisable in the event that stockholder approval for the
Series C conversion is not obtained by October 30, 1999, equal to the sum of the
liquidation preference amount and interest accrued thereon at 8% per annum from
July 2, 1999 per share. We intend to hold a special meeting of the stockholders
before October 30, 1999 to consider and vote on stockholder approval of the
Series C conversion.
The acquisitions are expected to add annualized revenues of
approximately $30 million and will be recorded using the purchase method of
accounting. As a result, we believe that we are poised to continue our growth in
these areas and to enhance our profitability through the implementation of
operating efficiencies.
New Revolving Credit Facility
On July 22, 1999, we entered into a $25 million revolving credit
facility with BankNorth Group, N.A. to fund acquisitions and for general working
capital purposes. No credit has been drawn to date, but any debt incurred under
this credit facility is secured debt that is guaranteed by our subsidiaries. The
revolving credit agreement has a term of three years, provides for an interest
rate based on LIBOR, and includes other terms and conditions customary for
secured revolving credit facilities.
Private Placement of up to 2,857,143 shares of common stock
On July 30, 1999, we completed an initial closing of a private placement
in which we issued 571,429 shares of common stock for aggregate consideration of
$4 million, and on August 2, 1999, we completed a subsequent closing of the
private placement in which we issued an additional one million shares of common
stock for aggregate additional consideration of $7 million. The proceeds from
the private placement will be used for potential future acquisitions and general
working capital purposes. We anticipate holding additional subsequent closings
under the private placement for the issuance of up to an additional 1,285,714
shares, for a total of 2,857,143 shares at a subscription price of $7 per share,
resulting in gross total private placement proceeds of $20 million. The
subscription agreements under which these shares have been or may be sold
obligate us to file a shelf registration statement for the resale of the shares.
Accordingly, we intend to file with the Securities and Exchange Commission by
not later than October 28, 1999 a shelf registration statement for the resale of
these shares, and to cause that registration statement to become effective by
not later than January 26, 2000.
DESCRIPTION OF WARRANTS
The following summaries of certain provisions of the warrants are not
complete. Investors should review the warrants and the warrant agreement
referred to below for questions they may have concerning particular provisions
or defined terms of the warrants.
The warrants were issued March 2, 1999 pursuant to a warrant agreement
with IBJ Whitehall Bank & Trust Company as warrant agent. A copy of the warrant
agreement is listed as an exhibit to the registration statement of which this
prospectus forms a part. See the section of this prospectus entitled "Where You
May Find More Information" for an explanation of how you may obtain a copy of
the warrant agreement and other exhibits to the registration statement.
General
Please refer to the section of this prospectus entitled "Securities to
be Offered" for a summary description of the warrants.
Each warrant, when exercised, will entitle the holder to receive one
fully paid and non-assessable share of common stock at an exercise price of
$6.25 per share. The exercise price and the number of shares of common stock
issuable upon the holder's exercise of a warrant are both subject to adjustment
in certain circumstances described below. The warrants will entitle their
holders to purchase shares of common stock representing an aggregate beneficial
ownership of approximately 10.06% of the issued and outstanding common stock,
based on 13,405,394 shares of common stock issued and outstanding as of June 30,
1999 and assuming an additional 1,500,000 shares of stock have been issued upon
exercise of the warrants.
The holders may exercise warrants at any time on or after September 2,
1999. Unless earlier exercised, the warrants will expire on the expiration date
of March 2, 2004. We will give notice of expiration not less than 90 nor more
than 120 days before the expiration date to the registered holders of the then
outstanding warrants. If we fail to give the notice when required, the warrants
will not expire until 90 days after notice is given.
In order to exercise all or any of the warrants, the holder is required:
(1) to deliver the warrants; this delivery can be made:
(a) in the case of warrants issued in certificate form, by
surrendering to the warrant agent the certificate(s)
representing the warrants to be exercised; and
(b) in the case of warrants issued in global form deposited
with the depositary, by complying with the applicable
procedures set forth in the warrant agreement;
in each case with the accompanying form of election to purchase properly
completed and executed; and
(2) to deliver to the warrant agent payment in full of the exercise
price for each share of common stock or other securities issuable
upon exercise of the warrants; the exercise price may be paid:
(a) in cash or by certified or official bank check or by wire
transfer to an account that Waste Systems has designated
for that purpose; or
(b) without the payment of cash, by cashless exercise; cashless
exercise takes the value of some warrants prior to exercise
and applies that value as payment of the exercise price to
exercise additional warrants; both the warrants serving as
payment of the exercise price value and the warrants
exercised for common stock are deemed exercised in a
cashless exercise; the value of warrants serving as payment
of the exercise price is deemed equal to the excess of th
then current market price per share of common stock on the
exercise date over the exercise price per share as of the
exercise date. A holder surrendering warrant certificate(s)
representing more than one warrant in connection with a
cashless exercise may specify the number of warrants the
holder wishes to exercise.
When the holder delivers the warrant certificate(s) and pays the
exercise price as described above, we will deliver or cause to be delivered to
the holder or upon the holder's written order, a stock certificate representing
one share of common stock for each warrant evidenced by such warrant
certificate, subject to adjustment as described herein. If the holder exercises
less than all of the warrants evidenced by a warrant certificate, a new warrant
certificate will be issued to the holder for the remaining number of warrants.
No fractional shares of common stock will be issued upon exercise of the
warrants. At the time of exercise, we will pay the holder an amount in cash
equal to the then current market price of any such fractional share of common
stock.
If a holder's Warrants are not exercised, such holder will not be
entitled to received dividends, to vote, to consent, to exercise any preemptive
rights or to receive notice as a stockholder in respect of any stockholders
meeting for the election of the Company's directors or any other purpose, or to
exercise any other rights whatsoever as a stockholder.
Certificates for warrants will be issued in fully registered form only.
No service charge will be made for registration of transfer or exchange upon
surrender of any warrant certificate at the office of the warrant agent
maintained for that purpose. We may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of warrant certificates.
In the event a bankruptcy or reorganization is commenced by or against
Waste Systems, a bankruptcy court may hold that unexercised warrants are
executory contracts that may be subject to our rejection with approval of the
bankruptcy court. As a result, a holder may not, even if sufficient funds are
available, be entitled to receive any consideration or may receive an amount
less than such holder would be entitled to receive if such holder had exercised
its warrants before the commencement of any such bankruptcy or reorganization.
Adjustments
Both number of shares of the common stock issuable upon the exercise of
the warrants and the exercise price will be subject to adjustment in certain
circumstances, including:
(1) our payment of dividends and other distributions on the common
stock payable in common stock or other equity interests of Waste
Systems;
(2) subdivisions, combinations and certain reclassifications of the
common stock;
(3) the issuance to all common stockholders of rights, options or
warrants entitling them to subscribe for additional shares of
common stock, or of securities convertible into or exercisable or
exchangeable for additional shares of common stock at an offering
price (or with an initial conversion, exercise or exchange price
plus such offering price) that is less than the then current
market price per share of common stock;
(4) the distribution to all holders of common stock of any of our
assets (including cash), our debt securities or any rights or
warrants to purchase any securities (excluding those rights,
options and warrants referred to in clause (3) above and cash
dividends and other cash distributions from current or retained
earnings);
(5) the issuance of shares of common stock for a consideration per
share that is less than the then current market price per share
of common stock; and
(6) the issuance of securities convertible into or exercisable or
exchangeable for common stock for a conversion, exercise or
exchange price per share that is less than the then current
market price per share of common stock.
The events described in clauses (5) and (6) above are subject to certain
exceptions described in the warrant agreement, including, without limitation,
certain bona fide public offerings and private placements, issuances of common
stock under any option, warrant, right or convertible security exercisable upon
issuance of the warrants and certain issuances of common stock pursuant to
employee stock incentive plans.
If the exercise price of our currently outstanding options or other
convertible securities is reduced to an exercise price equal to or less than the
exercise price of the warrants (as it may be adjusted as a result of the same
event or circumstance), then the number of shares of common stock issuable upon
exercise of each warrant automatically shall be adjusted upward, so that the
total number of shares issuable upon exercise of all warrants will represent the
same percentage of the then issued and outstanding common stock on a fully
diluted basis as the shares issuable upon exercise of the warrants prior to such
adjustment represented at that time. The phrase "on a fully diluted basis" shall
include any and all options, warrants or other rights to acquire common stock,
whether or not then exercisable, but excluding all such options or other rights
to acquire common stock (other than the warrants) at an exercise or conversion
price greater than the exercise price of the warrants, as adjusted.
No adjustment in the exercise price will be required unless the
adjustment would result in an increase or decrease of at least 1% in the
exercise price; provided, however, that any adjustment that is not made as a
result of this paragraph will be carried forward and taken into account in any
subsequent adjustment. In addition, at any time we may reduce the exercise price
(but not to an amount that is less than the par value of the common stock) for
any period of time (but not less than 20 business days) as deemed appropriate by
our Board of Directors.
Warrant Rights Upon Consolidation, Merger, Asset Sales and Bankruptcy
Event Consideration Receivable
o consolidation or merger of Waste o each warrant will thereafter be
Systems, or sale of all or exercisable for the right to
substantially all of our assets receive the kind and amount of
(other than all cash transactions). shares of stock or other securities
or property to which the holder
would have been entitled as a
result of such consolidation,
merger or sale had the warrants
been exercised immediately prior to
such event.
o consolidation or merger of Waste o each warrant will thereafter
Systems, or sale of all or entitle the holder to receive
substantially all of our assets distributions on an equal basis
(all cash transactions only); or with the holders of common stock or
other securities issuable upon
o dissolution, liquidation or wind exercise of the warrant, as if the
up of Waste Systems. warrant had been exercised
immediately before such event, less
the exercise price.
In either case, upon receipt of such payment, if any, the warrants will
expire and the holders' rights will cease. In the case of any such
consolidation, merger or sale of assets, the surviving or acquiring person and,
if Waste Systems dissolves, liquidates or winds up, Waste Systems, must deposit
promptly with the warrant agent the funds, if any, required to pay the warrant
holders. After the funds and the surrendered warrant certificates are received,
the warrant agent is required to deliver a check in the appropriate amount (or,
in the case of consideration other than cash, such other consideration as is
appropriate) as the warrant agent may be directed by the holders in writing.
In the event of a taxable distribution to holders of common stock that
results in an adjustment to the number of shares of common stock or other
consideration for which a warrant may be exercised, the holders may, in certain
circumstances, be deemed to have received a distribution subject to United
States federal income tax as a dividend.
Amendment
Any amendment or supplement to the warrant agreement that has an adverse
effect on the warrant holders' interest will require the written consent of the
holders of a majority of the then outstanding warrants (excluding any warrants
held by us or our affiliates). Notwithstanding the foregoing, from time to time,
we and the warrant agent, without consent of the holders, may amend or
supplement the warrant agreement for certain purposes, including to cure any
ambiguities, defects or inconsistencies or to make any change that does not
adversely affect the warrant holders' rights. The consent of each warrant holder
affected will be required for any amendment pursuant to which the exercise price
would be increased or the number of shares of common stock issuable upon
exercise of the warrants would be decreased (other than pursuant to adjustments
provided for in the warrant agreement) or the exercise period with respect to
the warrants would be shortened.
Registration Rights
At the time of the sale and issuance of the warrants, Waste Systems
entered into a registration rights agreement with the initial purchaser relating
to the registration with the Securities and Exchange Commission of the warrants
and the common stock subject to the warrants. The warrants registration rights
agreement requires us to register for resale the warrants and any common stock
that is issuable upon exercise of the warrants. For a more detailed description
of these registration rights, please see the section of this prospectus entitled
"Securities to be Offered."
<PAGE>
MATERIAL TERMS OF THE SELLING SECURITYHOLDERS' TRANSACTION
On March 2, 1999, we completed a private placement of $100.0 million
principal amount of 11 1/2% Senior Notes due 2006 and warrants to purchase an
aggregate of 1,500,000 shares of common stock at an exercise price of $6.25 per
share. In connection with that sale, we entered into a registration rights
agreement with the initial purchaser relating to registration of those warrants.
The warrants registration rights agreement requires us to register for
resale the warrants and any common stock that is issuable upon exercise of the
warrants. Under the warrant registration rights agreement, if we fail: (a) to
cause the registration statement of which this prospectus form a part to be
declared effective by the Securities and Exchange Commission on or prior to
October 28, 1999; or (b) to keep the registration statement effective during the
prescribed effective period; then we must increase the annual interest rate
payable on the originally issued senior notes by 0.50% until the registration
statement is declared or made effective, as applicable.
Accordingly, we are satisfying that obligation by filing with the
Securities and Exchange Commission the registration statement of which this
prospectus forms a part, which we intend to keep effective during the effective
period prescribed in the warrants registration rights agreement.
Holders of the warrants have been required to deliver certain
information, to be used by us in connection with the registration statement,
within the time periods set forth in the warrant registration rights agreement
in order to have their warrants included in the registration statement of which
this prospectus forms a part.
SELLING SECURITYHOLDERS
The following table sets forth the number of shares of our common stock
beneficially owned by each selling securityholder as of June 30, 1999, the
number of shares each selling securityholder is offering to sell, the number of
shares which each selling securityholder will beneficially own upon completion
of this offering, and the percentage ownership of each selling securityholder
upon completion of this offering. The selling securityholders have furnished to
us the information set forth below and this information is accurate to the best
of our knowledge.
<TABLE>
<S> <C> <C> <C> <C> <C>
Beneficial Ownership Beneficial Ownership
Prior to Offering(1) Shares to After Offering(1)(2)
Shares Percent be Sold Shares Percent
B-III Capital Partners, L.P. (3) 7,448,526 46.6% 337,500 7,111,026 44.5%
Prudential Insurance Company 1,034,684 7.5% 225,000 809,684 5.9%
of America (4)
Mitchell Hutchins 2,167,559 15.1% 150,000 2,017,559 14.1%
Asset Management Inc. (5)
John Hancock Advisers (6) 1,537,794 10.7% 30,000 1,507,794 10.5%
Credit Suisse(7) 105,000 0.8% 105,000 - 0.0%
Midland Advisors Company (8) 375,000 2.7% 375,000 - 0.0%
Chilton Investment 755,000 5.5% 255,000 500,000 3.7%
Company, Inc. (9)
Evergreen Investment 11,250 0.1% 11,250 - 0.0%
Management Company (10)
Penn Capital Management (11) 3,750 0.0% 3,750 - 0.0%
Saugatuck Partners L.P./ 7,500 0.1% 7,500 - 0.0%
Saugatuck International (12)
</TABLE>
---------------------------------------
(1) Based on a total of 13,405,394 shares of common stock outstanding as of
June 30, 1999. In computing the number of shares of common stock
beneficially owned by a person, the following shares are also deemed
outstanding and held by that person only: (a) shares of common stock
subject to currently exercisable options and warrants held by that
person; (b) shares of common stock subject to options and warrants held
by that person that become exercisable within 65 days of June 30, 1999;
(c) shares of common stock issuable upon conversion of currently
convertible securities held by that person; and (d) shares of common
stock issuable upon conversion of securities held by that person that
could become convertible within 60 days of June 30, 1999. For purposes
of computing the percentage of outstanding shares of common stock
beneficially owned by such person, the shares described in clauses (a)
through (d) above are deemed to be outstanding for such person only,
and are not deemed to be outstanding for purposes of computing the
ownership percentage of any other person.
(2) Assumes the sale of all of the shares of common stock subject to
warrants offered for resale in this prospectus. Does not assume the
sale of any shares of common stock registered for resale in a shelf
registration statement relating to an aggregate of 2,244,109 shares of
common stock received by stockholders in exchange for a portion of
their 7% Convertible Subordinated Notes (see the section of this
prospectus entitled "Recent Developments--Exchange of Common Stock for
7% Convertible Subordinated Notes due 2005" for a more complete
description of this transaction).
(3) Includes 4,879,104 shares of common stock currently owned, 2,231,922
shares issuable upon conversion at any time of 7% Convertible
Subordinated Notes at a conversion price of $10.00 per share, and
337,500 shares issuable upon exercise of warrants on or after September
2, 1999 at an exercise price of $6.25 per share. DDJ Capital
Management, LLC ("DDJ") serves as investment manager of B-III Capital
Partners, L.P. ("B-III"); and an affiliate of DDJ is the general
partner of B-III. Judy K. Mencher and David J. Breazzano, managing
directors of DDJ, serve as directors of Waste Systems.
(4) Includes 650,261 shares of common stock currently owned, 159,423 shares
issuable upon conversion at any time of 7% Convertible Subordinated
Notes at a conversion price of $10.00 per share, and 225,000 shares
issuable upon exercise of warrants on or after September 2, 1999 at an
exercise price of $6.25 per share.
(5) Includes 1,220,444 shares of common stock currently owned, 797,115
shares issuable upon conversion at any time of 7% Convertible
Subordinated Notes at a conversion price of $10.00 per share, and
150,000 shares issuable upon exercise of warrants on or after September
2, 1999 at an exercise price of $6.25 per share.
(6) Includes 591,112 shares of common stock currently owned, 916,682 shares
issuable upon conversion at any time of 7% Convertible Subordinated
Notes at a conversion price of $10.00 per share, and 30,000 shares
issuable upon exercise of warrants on or after September 2, 1999 at an
exercise price of $6.25 per share.
(7) Includes 105,000 shares issuable upon exercise of warrants on or after
September 2, 1999 at an exercise price of $6.25 per share.
(8) Includes 375,000 shares issuable upon exercise of warrants on or after
September 2, 1999 at an exercise price of $6.25 per share.
(9) Includes 500,000 shares of common stock currently owned and 255,000
shares issuable upon exercise of warrants on or after September 2, 1999
at an exercise price of $6.25 per share.
(10) Includes 11,250 shares issuable upon exercise of warrants on or after
September 2, 1999 at an exercise price of $6.25 per share.
(11) Includes 3,750 shares issuable upon exercise of warrants on or after
September 2, 1999 at an exercise price of $6.25 per share.
(12) Includes 7,500 shares issuable upon exercise of warrants on or after
September 2, 1999 at an exercise price of $6.25 per share.
PLAN OF DISTRIBUTION
This prospectus relates to the offer and sale from time to time by the
holders thereof of up to (a) 1,500,000 warrants, each of which is exercisable to
purchase one share of common stock, and (b) 1,500,000 shares of common stock
issuable upon exercise of the warrants.
Offer and Sale of Warrants and Common Stock
Any of the selling securityholders or their pledgees, donees,
transferees or other successors in interest, may from time to time, in one or
more transactions, sell all or a portion of the warrants or shares of common
stock in such transactions at prices then prevailing or related to the then
current market price or at negotiated prices. The offering price of the warrants
and shares of common stock from time to time will be determined by the selling
securityholders. At the time of such determination, the market price of the
shares on the Nasdaq SmallCap Market may be higher or lower than the offering
price of the shares or the exercise price of the warrants.
If the selling securityholders effect transactions by selling warrants
or shares of common stock to or through underwriters, brokers, dealers or
agents, these underwriters, brokers, dealers or agents may receive compensation
in the form of discounts, concessions or commissions from a selling
securityholder or from purchasers of warrants or shares of common stock for whom
they may act as agents, and underwriters may sell warrants or shares of common
stock to or through dealers, and such dealers may receive compensation in the
form of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agents. The selling
securityholders and any brokers, dealers or agents that participate in the
distribution of the warrants or shares of common stock may be deemed to be
underwriters, and any profit on the sale of the warrants or shares of common
stock by them and any discounts, concessions or commissions received by any
underwriters, brokers, dealers or agents may be deemed to be underwriting
discounts and commissions under the Securities Act. Under agreements that may be
entered into by us, underwriters, brokers, dealers and agents who participate in
the distribution of warrants or shares of common stock may be entitled to
indemnification by Waste Systems against certain liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments which such underwriters, brokers, dealers or agents may be required to
make in respect thereof. The warrants and shares of common stock may be sold
directly or through broker-dealers acting as principal or agent, or pursuant to
a distribution by one or more underwriters on a firm commitment or best-effort
basis.
The selling securityholders, or their pledgees, donees, transferees or
other successors in interest, may offer and sell their shares in the following
manner:
o with respect to the common stock only, on the Nasdaq SmallCap Market or
other exchanges on which the shares are listed at the time of sale;
o in the over-the-counter market or otherwise at prices and at terms then
prevailing or at prices related to the then current market price;
o in underwritten offerings;
o in privately negotiated transactions;
o in a block trade in which the broker or dealer so engaged will attempt to
sell the warrants or shares of common stock as agent, but may position
and resell a portion of the block as principal to facilitate the
transaction;
o a broker or dealer may purchase as principal and resell such warrants or
shares of common stock for its account pursuant to this prospectus;
o with respect to the common stock only, an exchange distribution in
accordance with the rules of the exchange;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; or
o through any combination of the above.
The selling securityholders may accept and, together with any agent of
the selling securityholders, reject in whole or in part any proposed purchase of
the warrants or shares of common stock offered by this prospectus. We will not
receive any proceeds from the offering or sale of warrants or shares of common
stock by the selling securityholders.
Prospectus Supplement Regarding Sales
To the extent required, we will set forth in a prospectus supplement
accompanying this prospectus, or if, appropriate, in a post-effective amendment,
the following information: (1) the amount of warrants or shares of common stock
to be sold; (2) purchase prices; (3) public offering prices; (4) the names of
any agents, dealers or underwriters; and (5) any applicable commissions or
discounts with respect to a particular offer.
Compliance with State Securities Laws
We have not registered or qualified the warrants or shares of common
stock offered by this prospectus under the laws of any country, other than the
United States. In certain states, the selling securityholders may not offer or
sell their warrants or shares of common stock unless (1) we have registered or
qualified such warrants or shares of common stock for sale in such states or (2)
we have complied with an available exemption from registration or qualification.
Also, in certain states, to comply with such state securities laws, the selling
securityholders can offer and sell their warrants or shares of common stock only
through registered or licensed brokers or dealers.
Rule 144
The selling securityholders may also resell all or a portion of the
warrants or shares of common stock in open market transactions in reliance upon
Rule 144 under the Securities Act, provided the selling securityholder meets the
criteria and conforms to the requirements of such Rule 144.
Payment of Expenses
We will pay substantially all of the expenses related to the
registration of the warrants or shares of common stock offered by this
prospectus. The selling securityholders will pay any sales commissions or other
seller's compensation applicable to such transactions.
USE OF PROCEEDS
We will not receive any cash proceeds from the sale of the warrants and
shares of common stock. We are registering the warrants and common stock offered
by the selling securityholders solely to satisfy our obligations under exchange
agreements.
LEGAL MATTERS
The validity of the securities being offered hereby will be passed upon
by Goodwin, Procter & Hoar LLP, Boston, Massachusetts.
EXPERTS
The consolidated financial statements of Waste Systems as of December
31, 1998 and 1997, and for each of the years in the three-year period ended
December 31, 1998, appearing in Waste Systems Annual Report on Form 10-K
incorporated by reference in this prospectus and the registration statement,
have been audited by KPMG LLP, certified independent public accountants, and in
reliance upon the authority of said firm as experts in accounting and auditing.
WHERE YOU MAY FIND MORE INFORMATION
We have filed a registration statement on Form S-3 with the Securities
and Exchange Commission covering the resale of the warrants and the shares of
common stock. This prospectus, which is part of the registration statement,
omits certain information included in the registration statement. Statements
made in this prospectus as to the contents of any contract, agreement or other
document are not necessarily complete. Since this prospectus may not contain all
the information that you may find important, you should review the full text of
these documents. We have included copies of these documents as exhibits to our
registration statement.
We are currently subject to the periodic reporting and other
informational requirements of the Securities Exchange Act of 1934, as amended,
and, in accordance with its rules, we file annual, quarterly and other
information with the Securities and Exchange Commission. You can inspect and
copy at prescribed rates the reports and other information that we file with the
Securities and Exchange Commission at the public reference facilities maintained
by the Securities and Exchange Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and also at the regional offices of
the Securities and Exchange Commission located at 7 World Trade Center, Suite
1300, New York, New York 10048 and the Citicorp Center at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. You may obtain information on
the operation of the public reference facilities by calling the Securities and
Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission
also maintains an internet web site at http://www.SEC.gov that contains reports,
proxy and information statements and other information. You can also obtain
copies of these materials from us upon request.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents and other materials, which we have filed with
the Securities and Exchange Commission, are incorporated and specifically made a
part of this prospectus by reference:
(1) Annual Report on Form 10-K for the fiscal year ended December
31, 1998, as amended by the Report on Form 10-K/A filed on
April 8, 1999, as further amended by the Report on Form 10-K/A
Amendment No. 2 filed on August 5, 1999;
(2) Quarterly Report on Form 10-Q for the quarter ended March 31,
1999, as amended by the Report on Form 10-Q/A filed on August
5, 1999;
(3) Proxy Statement dated April 30, 1999; and
(4) Current Report on Form 8-K filed on March 12, 1999 and Current
Report on Form 8-K filed on March 25, 1999, as amended by
Current Report on Form 8-K/A filed on May 24, 1999.
In addition, all documents that we file with the Securities and
Exchange Commission pursuant to sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the date of this prospectus will be deemed
to be incorporated by reference into this prospectus and to be part of this
prospectus from the date of the filing of such documents with the Securities and
Exchange Commission. Any statement contained in this prospectus or in a document
incorporated or deemed to be incorporated by reference in this prospectus will
be deemed to be modified or superseded for purposes of this prospectus if a
statement contained in this prospectus or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes that statement. Any statement so modified or superseded
will not be deemed, except as so modified or superseded, to constitute a part of
this prospectus.
This prospectus incorporates documents by reference that are not
presented in this prospectus or delivered herewith. Copies of these documents,
other than exhibits to these documents that are not specifically incorporated by
reference in this prospectus, are available without charge to each person to
whom a copy of this prospectus is delivered, upon the written or oral request of
that person. Requests for any information should be directed to Waste Systems
International, Inc., 420 Bedford Street, Suite 300, Lexington, Massachusetts
02420 (telephone number (781) 862-3000), attention: Chief Financial Officer.
<PAGE>
II-4
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth an itemized statement of all expenses
expected to be incurred in connection with the issuance and distribution of the
securities being registered (all of which are estimated, other than the filing
fee of the Securities and Exchange Commission):
Securities and Exchange Commission filing fee............ $ 2,606
Legal fees and expenses.................................. 10,000
Accounting fees and expenses............................. 2,500
NASDAQ fees and expenses................................. 7,500
Transfer Agent's fees and expenses....................... 500
Blue sky fees and expenses............................... 500
Miscellaneous............................................ 0
$ 23,606
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides that a corporation may indemnify a director, officer, employee or agent
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement in respect of or in successful defense of any action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
We have obtained directors' and officers' insurance providing benefits
aggregating $5 million. In addition, Article X of our Second Amended and
Restated Certificate of Incorporation (the "Charter") provides that directors or
officers of Waste Systems, or others serving as a director or officer of another
corporation at our request, shall be indemnified to the fullest extent permitted
by the DGCL. Article X further provides that the indemnification rights provided
by such Article X shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under any law, agreement or vote of
stockholders or disinterested directors or otherwise. Article VII of the Charter
further provides that no director shall be personally liable to us or our
stockholders for monetary damages for any breach of fiduciary duty by such
person as a director, except to the extent that the elimination or limitation of
liability is not permitted under the DGCL as in effect when such liability is
determined. Any amendment or repeal of Article VII by the stockholders or an
amendment to the DGCL shall not adversely affect any right or protection under
such Article existing at the time of such amendment or repeal with respect to
any act or omission occurring prior to such amendment or repeal of a person
serving as a director at the time of such amendment or repeal.
Article V of our By-laws provides that present and former directors and
officers of Waste Systems shall be indemnified by us to the fullest extent
authorized by the DGCL, as the same exists or may in the future be amended to
provide for broader indemnification rights, against any and all reasonable
expenses or liability incurred in connection with any threatened, pending or
completed legal proceeding in which any such person is involved as a result of
serving or having served as a director or officer of Waste Systems, as a
director or officer of any subsidiary of Waste Systems, or acting or having
acted in any capacity with any other entity at our written request or direction,
in each case if such person acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of Waste
Systems, and with respect to criminal actions or proceedings, that such person
had no reasonable cause to believe his or her conduct was unlawful. The By-laws
provide that any indemnification extended to an officer pursuant to Article V
shall include the reimbursement of expenses by us prior to the final disposition
of the proceeding upon the receipt of an undertaking by such indemnified person
to repay such payment if it is determined that such indemnified person is not
entitled to such reimbursement. The By-laws further provide that the previously
described provisions of Article V are deemed to be a contract between Waste
Systems and each director and officer. In addition, the By-laws provide that the
provisions with respect to indemnification and payment of expenses incurred in
defending a covered proceeding shall not be exclusive of any right which any
person may have or hereafter acquire under any statute, provision of the Charter
or the By-laws, agreement, vote of the stockholders or disinterested directors
or otherwise.
We have also entered into an indemnification agreement with one of our
directors, William B. Philipbar. The indemnification agreement requires us,
among other things, to indemnify Mr. Philipbar to the fullest extent permitted
by law and advance to Mr. Philipbar all related expenses. Under this agreement,
we must also indemnify and advance all expenses incurred by Mr. Philipbar
seeking to enforce his rights under the indemnification agreement, provided Mr.
Philipbar prevails. Although the form of indemnification agreement offers
substantially the same scope of coverage afforded by law, it provides additional
assurance to Mr. Philipbar that indemnification will be available because, as a
contract, it cannot be modified unilaterally in the future by the Board of
Directors or the stockholders to eliminate the rights it provides. It is the
position of the Commission that indemnification of directors and officers for
liabilities under the Securities Act is against public policy and unenforceable
pursuant to Section 14 of the Securities Act.
Item 16. Exhibits and Financial Statement Schedules.
The following is a complete list of exhibits filed or incorporated by
reference as part of this prospectus.
Exhibit No. Description
1.1 Purchase Agreement, dated February 25, 1999, by and among First Albany
Corporation and Waste Systems International, Inc. and its subsidiaries
(incorporated by reference to Exhibit 1.1 of the Company's Current Report
on Form 8-K, dated March 2, 1999).
4.1 Warrant Agreement dated as of March 2, 1999, by and among Waste Systems
International, Inc. and IBJ Whitehall Bank & Trust Company, a New York
banking corporation, as warrant agent (incorporated by reference to
Exhibit 4.2 of the Company's Current Report on Form 8-K dated March 2,
1999).
4.2 Warrant Registration Rights Agreement, dated as of March 2, 1999, by and
among Waste Systems International, Inc. and its subsidiaries and First
Albany Corporation (incorporated by reference to Exhibit 4.4 of the
Company's Current Report on Form 8-K, dated March 2, 1999).
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
securities being registered.
12.1 Statements re: Computation of Ratios (incorporated by reference to Exhibit
12.1 to the Company's Registration Statement on Form S-4 File No.
333-81341).
23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1).
23.2 Consent of KPMG LLP, Independent Accountants.
24.1 Powers of Attorney (included on page II-4 hereto).
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(b) The registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(e) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the Town of Lexington, Commonwealth of
Massachusetts, on this 5th day of August, 1999.
WASTE SYSTEMS INTERNATIONAL, INC.
By: /s/ Robert Rivkin
Robert Rivkin
Executive Vice President_Acquisitions, Chief Financial
Officer, Secretary, Treasurer and Director
(Principal Financial and Accounting Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of Waste Systems International, Inc. hereby constitute Robert Rivkin,
our true and lawful attorney with full power to him to sign for us and in our
names in the capacities indicated below, the registration statement filed
herewith and any and all amendments to said registration statement, and
generally to do all such things in our names and in our capacities as officers
and directors to enable Waste Systems International, Inc. to comply with the
provisions of the Securities Act of 1933 and all requirements of the Securities
and Exchange Commission, hereby ratifying and confirming our signatures as they
may be signed by our said attorney, to said registration statement and any and
all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
Date: August 5, 1999 By: /s/ Philip Strauss
-------------------
Philip Strauss
Chairman, Chief Executive Officer and
President
(Principal Executive Officer)
Date: August 5, 1999 By: /s/ Robert Rivkin
-----------------
Robert Rivkin
Executive Vice President_Acquisitions,
Chief Financial Officer, Secretary,
Treasurer and Director (Principal
Financial and Accounting Officer)
Date: August 5, 1999 By: /s/ Jay J. Matulich
-------------------
Jay J. Matulich_Director
Date: August 5, 1999 By: /s/ David J. Breassano
----------------------
David J. Breazzano_Director
Date: August 5, 1999 By: /s/ Charles Johnston
--------------------
Charles Johnston_Director
Date: August 5, 1999 By: /s/ Judy K. Mencher
-------------------
Judy K. Mencher_Director
Date: August 5, 1999 By: /s/ William B. Philipbar
------------------------
William B. Philipbar_Director
<PAGE>
Exhibit 5.1
August 4, 1999
Waste Systems International, Inc.
420 Bedford Street, Suite 300
Lexington, MA 02420
Re: Legality of Securities to be Registered under Registration
Statement on Form S-3.
Ladies and Gentlemen:
This opinion is delivered in our capacity as counsel to Waste Systems
International, Inc., a Delaware corporation (the "Company"), in connection with
the preparation and filing with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Securities Act") of a Registration
Statement on Form S-3 (the "Registration Statement") relating to the
registration of 1,500,000 warrants (the "Warrants") to purchase common stock of
the Company, $.01 par value per share (the "Common Stock") and 1,500,000 shares
of Common Stock issuable upon exercise of the Warrants (the "Warrant Shares").
As counsel for the Company, we have examined that certain Warrant
Agreement (the "Agreement"), dated as of March 2, 1999, between the Company and
subsidiaries and IBJ Whitehall Bank & Trust Company, as Warrant agent, the
Registration Statement and the prospectus contained therein, and the Company's
Second Amended and Restated Certificate of Incorporation, as amended, and
By-laws, each as presently in effect, such records of the corporate proceedings
of the Company as we have deemed to be material and such other certificates,
receipts, records, and other documents as we have deemed necessary or
appropriate for the purposes of this opinion.
We are attorneys admitted to practice in the Commonwealth of
Massachusetts. We express no opinion concerning the laws of any jurisdictions
other than the laws of the United States of America and the Commonwealth of
Massachusetts, and also express no opinion with respect to the blue sky or
securities laws of any state, including Massachusetts.
Based on the foregoing, we are of the opinion that (i) the Warrants are
duly authorized, executed and delivered by the Company and (ii) when the Warrant
Shares are sold and paid for pursuant to the terms of the Agreement, the Warrant
Shares will be duly authorized, validly issued, fully paid and non-assessable by
the Company under the Delaware General Corporation Law.
The foregoing assumes that all requisite steps will be taken to comply
with the requirements of the Securities Act and applicable requirements of state
laws regulating the offer and sale of securities.
We hereby consent to being named as counsel to the Company in the
Registration Statement and to the inclusion of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Goodwin, Procter & Hoar LLP
GOODWIN, PROCTER & HOAR LLP
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use of our report incorporated herein by reference
and to the reference to our firm under the heading "Experts" in the Prospectus.
/s/ KPMG LLP
KPMG LLP
Boston, Massachusetts
August 4, 1999
