As filed with the Securities and Exchange Commission on May 8, 2000
Registration No. 333-92543
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
WASTE SYSTEMS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-420366
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
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)
---------------
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 of process)
-------------
Copies to:
NANCY H. CORBETT
MORGAN, LEWIS & BOCKIUS LLP
101 PARK AVENUE
NEW YORK, NEW YORK 10178
TEL: (212) 309-6000
FAX: (212) 309-6273
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
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, as amended (the "Securities Act"), other than securities offered only
in connection with dividend or interest reinvestment plans, check the following
box. [X]
If this Form is filed 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, 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. [ ]
===============================================================================
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
- ---------------------- ---------------- ------------------- ------------------ ----------------
Title of each class Proposed maximum Proposed maximum
of securities Amount to be offering price aggregate offering Amount of
to be registered registered per security(1) price(1) Registration Fee
- ---------------------- ---------------- ------------------- ------------------ ----------------
Common Stock,
par value $.01 6,681,365 (2)
per share shares
- ---------------------- ---------------- ------------------- ------------------ ----------------
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended,
and based upon the average of the high and low sale prices of the
Common Stock reported on the Nasdaq National Market on April 14, 2000.
(2) Registration fee was previously paid.
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 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED MAY__, 2000
6,681,365 SHARES
WASTE SYSTEMS INTERNATIONAL, INC.
COMMON STOCK
---------------
This prospectus relates to the offer and sale of 6,681,365 shares of common
stock of Waste Systems International, Inc. by the following stockholders:
o Kevin Baldwin;
o Kendall Baldwin;
o Kelly Baldwin;
o Kimberly Robb;
o Baldwin, L.P.;
o Chilton Investment Company Inc.;
o John Hancock Advisers;
o Evergreen Investment Management Company;
o Penn Capital Management;
o Tudor Investment Corporation;
o Saugatuck Partners L.P.;
o First Albany Corporation; and
o B-III Capital Partners, L.P.
We will not receive any of the proceeds from the sale of the shares
offered hereby. All expenses of registration of the shares which may be offered
hereby under the Securities Act will be paid by us (other than underwriting
discounts and selling commissions, and fees and expenses of advisors to any of
the Selling Stockholders).
Our common stock is traded on the Nasdaq National Market under the
symbol "WSII." On April 19, 2000, the closing price of the common stock as
reported on the Nasdaq Market was $2.88.
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 2 HEREOF.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may be changed.
The Selling Stockholders may not sell these securities 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.
THE DATE OF THIS PROSPECTUS IS MAY , 2000
<PAGE>
RISK FACTORS
An investment in Waste Systems involves a significant degree of risk. You should
consider carefully the following factors in addition to other information
included in this prospectus before making an investment in our common stock.
Our history of losses makes the common stock a highly speculative investment.
From Waste Systems' inception through September 30, 1999, we have had
aggregate net losses of approximately $56 million on aggregate revenues of
approximately $64 million and have had an accumulated loss from operations of
$30 million. Continued losses and negative cash flow may prevent us from
achieving our strategic objectives, as well as limit our ability to meet our
financial obligations.
Following Waste Systems' 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.
Risks of substantial voting control by Waste Systems' management and major
stockholders.
As of November 12, 1999, Waste Systems' directors, executive officers
and their affiliates and other major stockholders those holding 5% or more of
the common stock - beneficially owned approximately 65.82% 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.
Future issuance of additional equity by us may dilute the interest of
our existing stockholders. We currently have:
o up to 4,955,143 shares of common stock issuable upon
conversion of our 7% Convertible Subordinated Notes
outstanding as of November 12, 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 1,500,000 shares of common stock issuable upon exercise
of outstanding warrants, which are exercisable at $6.25 per
share of common stock from September 2, 1999 to March 2, 2004;
o up to 3,213,118 shares of common stock issuable upon exercise
of options outstanding as of November 12, 1999 under our stock
option plans, subject to vesting requirements, at prices
ranging from $1.41 to $9.25; and
o an additional 786,882 shares of common stock reserved for
issuance as of November 12, 1999 under our stock option plans.
In addition, in August 1999, we closed a private placement of our
common stock for aggregate consideration of approximately $16 million at $7 per
share. The proceeds from the private placement will be used for potential future
acquisitions and general working capital purposes. Finally, our ability to
achieve our business objectives depends on our use of a combination 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 percentage ownership
interests of our existing stockholders will be diluted.
Future sales of common stock may adversely affect the market for our common
stock by driving down the price of the common stock.
Stockholders may be adversely affected by future sales of common stock
by other stockholders. If any of our larger stockholders sells 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. These 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 20,348,446 shares of our
common stock outstanding (based on the number of shares outstanding as of April
19, 2000 and assuming no exercise of outstanding stock options after that date),
20,115,236 of which are freely tradable without restriction under the Securities
Act.
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 4,000,000 shares of common stock reserved for issuance under our stock
option plans; and
o 1,500,000 shares of common stock issuable upon the exercise of warrants
to purchase shares of common stock at an exercise price of $6.25 per
share, for resale by the holders.
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.
It is unlikely that we will pay dividends to our stockholders in the future,
such that the only return on a stockholder's investment in Waste Systems will be
recognized (if at all) at the time of sale of the common stock by the
stockholder.
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 that
prohibit us from making dividend payments to our stockholders.
Anti-takeover provisions applicable to Waste Systems may not be favorable to our
stockholders.
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 acquirers
(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 the director to be removed;
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 these events would be beneficial to stockholders. These provisions also
could discourage or make more difficult a merger, tender offer or proxy contest,
even if these events would be beneficial to the interest of stockholders.
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 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 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 August 3, 1999, we entered into a $25 million revolving credit
facility with The BankNorth Group, N.A. to fund acquisitions and for general
working capital, $17.5 million of which has been drawn to date. Any debt
incurred under this credit facility is secured debt that is guaranteed by our
subsidiaries. With this new debt 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.
<PAGE>
The following table outlines the schedule of our required debt
amortization payments:
<TABLE>
<CAPTION>
Principal Payments Due During
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
at
December
31, 1999 2000 2001 2002 2003 2004 2005 2006 Remainder Total
- -------------------------- --------- ------- ------ ------- ------- ------ ------- ------ ---------- -------
(Dollars in thousands)
Long-Term Debt
Bank Credit Facility... $17,500 -- -- $17,500 -- -- -- -- -- $17,500
Capital Leases, Equipment
and other Notes Payable 6,599 934 2,209 960 1,039 923 201 221 112 6,599
Senior Notes........... 100,000 -- -- -- -- -- -- 100,000 -- 100,000
10% Convertible
Subordinated
Debentures.......... 450 450 -- -- -- -- -- -- -- 400
7% Convertible
Subordinated Notes 49,551 -- -- -- -- -- 49,551 -- -- 49,551
Total............. $174,100 1,384 2,209 18,460 1,039 923 49,752 100,221 112 174,100
</TABLE>
In addition, as disclosed in the Risk Factor subsection above, we
entered into a $25 million revolving credit facility on August 3, 1999. 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.
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 table illustrates our level of indebtedness
and ratio of earnings to fixed charges:
- ------------------------------------------------------ -----------------------
As of December 31,
1999
(dollars in thousands)
- ------------------------------------------------------ -----------------------
Long-term Indebtedness..................................... $174,100
Stockholders' Equity....................................... $ 46,852
Debt to Equity ratio....................................... 3.72:1
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, either because
of restrictive covenants in our debt documents or 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.
For the Years Ended
December 31,
1999 1998 1997
--------------- ------------- ------------
Ratio of Earnings to
Fixed Charges.................. N/A N/A N/A
For the year ended December 31, 1999, we incurred net losses that did not
cover fixed charges by approximately $28.5 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.
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.
A reduction in the market price of our common stock may limit our ability to
consummate future acquisitions.
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. 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 continues to decline, we
might be unable to use our common stock as consideration for future
acquisitions.
<PAGE>
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, Executive Vice
President--Acquisitions, Secretary, Treasurer and Director, 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 very
fragmented, and requires 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 competitors or with
tax-advantaged public sector operators.
Seasonal revenue fluctuations may make it more difficult to manage and finance
our business successfully.
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.
<PAGE>
Our geographic concentration exposes us to a higher degree of risk than our
geographically more diverse competitors.
Waste Systems has established solid waste management operations in
Central Pennsylvania, Vermont, Upstate New York, Eastern New England, and the
Baltimore, Maryland/Washington, D.C. region. 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 each region's state and local regulations. Factors that have a greater
impact on our selected markets than on our 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.
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.
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 unforeseen
delays, costs and litigation that could adversely affect our ability to achieve
our business objectives.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and current reports, proxy statements, and
other documents with the Securities and Exchange Commission. Our file number is
0-25988. You may read and copy any document we file at the SEC's public
reference room at Judiciary Plaza Building, 450 Fifth Street, NW, Room 1024,
Washington, D.C. 20549. You should call 1-800-SEC-0330 for more information on
the public reference room. The SEC maintains an Internet site at
http://www.sec.gov where certain information regarding issuers may be found.
This prospectus is part of a registration statement that we filed with
the SEC. The registration statement contains more information than this
prospectus regarding Waste Systems and its common stock, including certain
exhibits and schedules. You can get a copy of the registration statement from
the SEC at the address listed above or from its Internet site.
Our common stock is traded on The Nasdaq National Market. Proxy
statements and other information concerning us can also be inspected at the
offices of The Nasdaq Stock Market, 1735 K Street, N.W., Washington D.C. 20006.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate" into this prospectus information we
file with the SEC in other documents. This means that we can disclose important
information to you by referring to other documents that contain that
information. The information may include documents filed after the date of this
prospectus which update and supersede the information you read in this
prospectus. 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,
1999 filed on March 30, 2000; and
(2) Current Report on Form 8-K filed on January 18, 2000.
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>
FORWARD-LOOKING STATEMENTS
This prospectus contains 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.
These forward-looking statements are within the meaning of Section 27A of the
Securities and Exchange Act and are intended to be covered by the safe harbors
created thereby. The forward-looking statements 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 these forward-looking statements are
reasonable, we cannot assure you that we will achieve our 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.
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 do not undertake to
publicly update these forward-looking statements to reflect subsequent events.
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
November 12, 1999, our waste collection operations serve a total of
approximately 73,000 commercial, industrial, residential and municipal customers
in the Vermont, Central Pennsylvania, Upstate New York, Eastern New England and
Baltimore, Maryland/Washington, D.C. markets.
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. The Mostoller
landfill in Somerset, Pennsylvania opened on December 28, 1999. The aggregate
remaining estimated permitted capacity of these four owned landfills is
approximately 22.6 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 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.
<PAGE>
The Movement of the Solid Waste Management Industry Towards 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 6 beginning with "We have no control over many factors in our ability to
finance planned growth."
<PAGE>
Our Key Strengths
Through the implementation of our growth strategy, we believe we
demonstrate the following key strengths:
o Internalization of Waste
Throughout 1999, the Company increased the amount of waste collected by
the Company that was subsequently disposed at Company landfills, and increased
the amount of the waste delivered for disposal at the Company's landfills that
was collected by the Company. During the year ended December 31, 1999, nearly
100% of the waste from the Company's Vermont operations was delivered for
disposal at the Moretown Landfill, Inc. and approximately 36% of the waste
delivered for disposal at the Moretown Landfill during this period was collected
by the Company. In addition, approximately 65% of the waste from the Company's
Central Pennsylvania - Altoona division operations was delivered for disposal at
the Sandy Run Landfill and approximately 70% of the waste delivered for disposal
at the Sandy Run Landfill during this period was collected by the Company. Since
the acquisition of Community Refuse, Inc., on March 1, 1999, approximately 95%
of the waste from the Company's Central Pennsylvania - Harrisburg division
operations was delivered for disposal at the Community Refuse, Inc. landfill and
approximately 28% of the waste delivered for disposal at the Community Refuse,
Inc. landfill during this period was collected by the Harrisburg division and
other company regions. Since their acquisition in July 1999, Eastern Trans-Waste
of Maryland, Inc. disposed of approximately 56% of its waste at the Community
Refuse Services, Inc. landfill, while C&J Trucking Company, Inc. disposed of
approximately 14% of its waste at the Community Refuse Services, Inc. landfill.
It is management's intention to fully internalize these operations with WSI
owned landfills during 2000, including the Mostoller Landfill, which opened on
December 28, 1999.
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 Acquirer 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 15 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.
RECENT DEVELOPMENTS
Acquisitions
During the year ended December 31, 1999, Waste Systems acquired five
collection companies and a landfill in Central Pennsylvania, one collection
company in Vermont, two collection companies, two transfer stations and a paper
recycling plant in Eastern New England, two collection companies and a transfer
station in Upstate New York and a collection company and a transfer station in
the Baltimore, Maryland/Washington D.C. region. The aggregate cost of these
acquisitions was approximately $113.0 million consisting of approximately $72.7
million in cash, $19.3 million in common stock, $11.6 million in Series C
Preferred Stock and $9.4 million in assumed liabilities. The acquisitions have
combined annual revenues of approximately $42.0 million. The acquisitions have
all been recorded using the purchase method of accounting. In accordance with
the terms of the issuance of the Series C Preferred Stock, on October 21, 1999,
a special shareholders meeting was held and the Series C Preferred Stock was
converted into 1,763,000 shares of common stock.
Recent Business Developments
Medical Waste Licensing Agreement. During 1996, the Company entered
into a licensing and royalty agreement with ScotSafe Limited (ScotSafe), a
Glasgow, Scotland based company, for the exclusive rights to use the Company's
CFA medical waste processing technology throughout Europe. During the fourth
quarter of 1997 the Company terminated its licensing agreements with ScotSafe
because ScotSafe was in default for failure to pay the Company royalties due
under the terms of the agreement. Subsequent to the termination, ScotSafe was
placed into receivership and Eurocare Environmental Services, Ltd. (Eurocare)
purchased its assets in December 1997. In February 2000, the Company and
Eurocare entered into an exclusive European license for the Company's patented
medical waste treatment technology. As part of the licensing agreement, the
Company acquired a minority interest in, and the right of first refusal to
acquire, Eurocare.
Convertible Subordinated Notes. On February 15, 2000, the Company
closed an Exchange Offer for its $49,551,426 of Convertible Subordinated Notes
due 2005 and its $100,000,000 Senior Notes due 2006. Approximately $15,355,000
principal amount of, plus accrued but unpaid interest on, its 11 1/2% Series B
Senior Notes due 2006 and approximately $22,832,000 principal amount of, plus
accrued but unpaid interest on, its 7% Convertible Subordinated Notes due 2005
were tendered and exchanged into shares of the Company's newly designated Series
E Convertible Preferred Stock which carries an 8% dividend payable in kind or
cash at the option of the Company. The Company issued an aggregate of 38,531
shares of its Series E Convertible Preferred Stock. The Series E Convertible
Preferred Stock is redeemable at any time by the Company at par plus accrued and
unpaid dividends and, subject to any required stockholder approval, can be
converted into shares of the Company's common stock at a price of $8.00 per
share at any time at the option of the holder and can be mandatorily converted
by the Company if its common stock closing price equals or exceeds $8.00 for a
period of twenty consecutive trading days.
Series D. On December 28, 1999, the Company raised $15,000,000 through
a private placement of convertible preferred stock. The preferred stock can be
converted into shares of the Company's common stock at a price of $6.00 per
share at any time at the option of the holder and can mandatorily converted by
the Company if the Company's common stock closing price exceeds $9.00 for a
period of twenty consecutive trading days. Finally, the preferred stock is
eligible to vote on an as-converted basis with the Company's common stock and is
redeemable at any time by the Company.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock
offered hereby.
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth information with respect to the Selling
Stockholders, including:
o the number and approximate percentage of shares beneficially owned by each of
them as of November 12, 1999;
o the number of shares registered for sale; and
o the number and approximate percentage of shares to be owned by each of them
after the completion of this offering.
Except as otherwise disclosed below, none of the Selling Stockholders
has, or within the past three years has had, any position, office or other
material relationship with Waste Systems. Because the Selling Stockholders may
sell all or some portion of the shares of our common stock beneficially owned by
them, only an estimate (assuming each Selling Stockholder sells all of its
shares offered hereby) can be given as to the number of shares of our common
stock that will be beneficially owned by the Selling Shareholders after this
offering. The address of each person listed below is c/o Waste Systems
International, Inc., 420 Bedford Street, Suite 300, Lexington, Massachusetts
02420. All persons listed have sole voting and investment power with respect to
their shares unless otherwise indicated.
<TABLE>
<CAPTION>
COMMON STOCK COMMON STOCK
BENEFICIALLY OWNED BENEFICIALLY OWNED
PRIOR TO OFFERING1/ AFTER OFFERING
-------------------- ----------------------
<S> <C> <C> <C> <C> <C>
NUMBER
OF SHARES
NAME NUMBER PERCENT OFFERED NUMBER PERCENT
- ---------------------------------------- ------------- --------------- -------------- ------------- -------------
Kevin Baldwin 700,781 3.44% 700,7816/ 0 0%
Kendall Baldwin2/ 700,781 3.44% 700,7816/ 0 0%
Kelly Baldwin3/ 743,776 3.66% 743,7766/ 0 0%
Kimberly Robb4/ 743,776 3.66% 743,7766/ 0 0%
Baldwin, L.P.5/ 1,552,506 7.64% 1,552,5066/ 0 0%
Chilton Investment Company Inc. 1,759,7007/ 8.55% 1,000,000 759,700 3.69%
John Hancock Advisers 1,845,3978/ 8.67% 307,603 1,537,794 7.23%
Evergreen Investment Management Company 82,678 0.41% 71,428 11,250 0.06%
Penn Capital Management 159,875 0.79% 150,000 9,875 0.05%
Tudor Investment Corporation 71,428 0.35% 71,428 0 0%
Saugatuck Partners L.P. 50,000 0.25% 50,000 0 0%
First Albany Corporation 17,857 0.09% 17,857 0 0%
B-III Capital Partners, L.P. 8,019,9559/ 35.02% 571,429 7,448,526 32.53%
</TABLE>
1/ Based on a total of 20,330,946 shares of common stock outstanding as of
April 19, 2000.
2/ Kendall Baldwin is an employee of Waste Systems and served as a Director
and as Vice-President of Eastern Trans-Waste of Maryland.
3/ Kelly Baldwin served as a Director and as Secretary and Treasurer of
Eastern Trans-Waste of Maryland.
4/ Kimberly Robb served as a Director and as President of Eastern Trans-Waste
of Maryland.
5/ After the closing of the acquisition of Eastern Trans-Waste of Maryland,
Kevin Baldwin, Kendall Baldwin, Kelly Baldwin and Kimberly Robb
collectively transferred by gift 142,106 shares of common stock of Waste
Systems and 800 shares of Series C preferred stock of Waste Systems (which
were converted into 1,410,400 shares of common stock of Waste Systems on
October 21, 1999) to Baldwin, L.P. Horace G. Baldwin is the general partner
of Baldwin, L.P.
6/ The former stockholders of Eastern Trans-Waste of Maryland were
contractually restricted from selling any shares of our Common Stock
pursuant to this Registration Statement until December 31, 1999. From
January 1, 2000 through June 30, 2000, the former stockholders of Eastern
Trans-Waste of Maryland may, subject to the effectiveness of this
Registration Statement, collectively sell up to 20% of their shares of
Common Stock (less any shares of Common Stock sold by the former
stockholders of Eastern Trans-Waste of Maryland pursuant to their
"piggyback" registration rights). After June 30, 2000, the former
stockholders of Eastern Trans-Waste of Maryland may sell their share of
Common Stock without any contractual restrictions.
7/ Includes 1,504,700 shares of Common Stock currently owned and 255,000
shares of Common Stock issuable upon the exercise of warrants to purchase
shares of Common Stock at an exercise price of $6.25 per share.
8/ Includes 898,715 shares of Common Stock currently owned, 916,682 shares of
Common Stock issuable upon conversion of Notes at a conversion price of
$10.00 as set forth in the Notes and 30,000 shares of Common Stock issuable
upon the exercise of warrants to purchase shares of Common Stock at an
exercise price of $6.25 per share.
9/ Includes 5,450,533 shares of Common Stock currently owned, 2,231,922 shares
of Common Stock issuable upon conversion of Notes at a conversion price of
$10.00 as set forth in the Notes and 337,500 shares of Common Stock
issuable upon the exercise of warrants to purchase shares of Common Stock
at an exercise price of $6.25 per share. DDJ Capital Management, LLC
("DDJ") serves as the investment manager to B-III; an affiliate of DDJ acts
as the general partner of B-III.
We have agreed to use our best efforts to keep this Registration
Statement effective generally for a period of three years.
<PAGE>
PLAN OF DISTRIBUTION
The shares of common stock registered hereunder and owned by the
Selling Stockholders may be offered and sold by means of this prospectus from
time to time as market conditions permit in the over-the-counter market, or
otherwise at prices and terms then prevailing or at prices related to the
then-current market price, or in negotiated transactions. These shares may be
sold by one or more of the following methods, without limitation:
o a block trade in which a broker or dealer so engaged will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o a purchase by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which the broker solicits
a purchase; and
o face-to-face transactions between sellers and purchasers without a broker or
dealer.
In effecting sales, brokers or dealers engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate. Such
brokers or dealers may receive commissions or discounts from Selling
Stockholders in amounts to be negotiated.
The Selling Stockholders and any brokers or dealers who act in
connection with the sale of the shares hereunder may be deemed to be
"underwriters" within the meaning of 2(11) of the Securities Act, and any
commissions received by them or any profit on any resale of the shares as
principal might be deemed to be underwriting discounts and commissions under the
Securities Act. We have agreed to indemnify the Selling Stockholders and we may
agree to indemnify any such broker or dealer who may be deemed to be an
underwriter against certain liabilities, including liabilities under the
Securities Act as an underwriter or otherwise.
We have advised the Selling Stockholders that, during such time as they
may be engaged in a distribution of the shares of common stock included herein,
they must comply with the applicable provisions of Regulation M under the
Exchange Act, as amended ("Regulation M") and, in connection therewith, the
Selling Stockholders may not engage in any stabilization activity in connection
with any of our securities, that they must furnish copies of this prospectus to
each broker-dealer through which the shares of our common stock included herein
may be offered, and that they may not bid for or purchase any of our securities
or attempt to induce any person to purchase any of our securities except as
permitted under Regulation M. The Selling Stockholders have also agreed to
inform us and broker-dealers through whom sales may be made hereunder when the
distribution of the shares is completed.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered by
this prospectus has been passed upon for Waste Systems by Morgan, Lewis &
Bockius LLP, New York, New York.
EXPERTS
The consolidated financial statements for each of the years in the
three-year period ended December 31, 1999 incorporated by reference in this
prospectus and elsewhere in this Registration Statement have been audited by
KPMG LLP, independent certified public accountants, and in reliance upon the
authority of said firm as experts in accounting and auditing.
<PAGE>
No dealer, representative or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and if given or made, such information or representations must not
be relied upon as having been authorized by Waste Systems. Neither the delivery
of this prospectus nor any sale made hereunder shall under any circumstances
create any implication that the information contained herein is correct as of
any date subsequent to the date hereof. This prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any securities offered hereby
by anyone in any jurisdiction in which such offer or solicitation is not
authorized or in which the person making such offer or solicitation is not
qualified to do so or to anyone to whom it is unlawful to make such offer or
solicitation.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ---------------------------------------------------------------- ---- -------------------------------------------------------- -----
RISK FACTORS 2 Estimated accruals for landfill closure and post-closure 8
costs may not meet our actual financial obligations.
Our history of losses makes the common stock a highly 2 Environmental and other government regulations impose 8
speculative investment. costs and uncertainty on our operations.
Risks of substantial voting control by Waste Systems' 2 We are exposed to potential liability for environmental 9
management and major stockholders. damage and regulatory noncompliance.
Issuance of additional equity may be dilutive to stockholders. 2 Our environmental liability insurance may not cover all 9
risks of loss.
Future sales of common stock may adversely affect the market 3 Addressing local community concerns about our operations 9
for our common stock. may adversely affect our business.
Market conditions may reduce the trading price of our common 3 WHERE YOU CAN FIND MORE INFORMATION 10
stock.
It is unlikely that we will pay dividends to our stockholders 3 DOCUMENTS INCORPORATED BY REFERENCE 10
in the future, such that the only return on a stockholder's
investment in Waste Systems will be recognized (if at all)
at the time of sale of the common stock by the stockholder.
Anti-takeover provisions applicable to Waste Systems may not 3 FORWARD LOOKING STATEMENTS 11
be favorable to our stockholders.
Failure to achieve adjusted stockholders' equity of at least 4 THE COMPANY 11
$40,000,000 will increase our interest expense.
Incurring more debt could further exacerbate the risks of our 4 Current Integrated Operations. 11
high level of indebtedness.
We may not generate enough cash to service our indebtedness or 4 The Movement of the Solid Waste Management Industry 12
our other liquidity needs. Towards Consolidation and Integration.
Our high level of indebtedness could adversely affect our 5 Our Strategy to Capitalize on Industry Consolidation 12
financial health. and Integration.
We have no control over many factors in our ability to finance 6 Our Key Strengths. 13
planned growth.
Our future success depends upon our ability to manage rapid 6 RECENT DEVELOPMENTS 14
growth in operations and personnel.
Our future success depends upon our ability to identify, 6 Acquisitions. 14
acquire and integrate acquisition costs.
A reduction in the market price of our common stock may limit 6 Recent Business Developments. 14
our ability to consummate future acquisitions.
Loss of key executives could affect our ability to achieve 7 USE OF PROCEEDS 14
Waste Systems' business objectives.
Failed acquisitions or projects may adversely affect our 7 SELLING STOCKHOLDERS 15
results of operations and financial condition.
Our business may not succeed due to the highly competitive 7 PLAN OF DISTRIBUTION 17
nature of the solid waste management industry.
Seasonal revenue fluctuations may make it more difficult to 7 LEGAL MATTERS 17
manage and finance our business successfully.
Our geographic concentration exposes us to a higher degree of 8 EXPERTS 17
risk than our geographically more diverse competitors.
Potential difficulties in acquiring landfill capacity could 8
increase our costs.
Failure to obtain landfill closure performance bonds and 8
letters ofcredit may adversely affect our business.
</TABLE>
<PAGE>
II-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses to be incurred in connection with the
distribution of the common stock covered by this Registration Statement, all of
which will be paid by Waste Systems, are as follows:
SEC Registration Fee $ 7,830.00
Nasdaq Listing Fee *
Printing and Engraving Costs 5,000.00
Legal Fees and Expenses 10,000.00
Accounting Fees and Expenses 5,000.00
Miscellaneous 5,000.00
Total 32,830.00*
- -----------------------------
* To be filed by amendment.
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
and 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.
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
4.1 -- Amended and Restated Certificate of Incorporation of Waste Systems
(incorporated by reference to Exhibit 4.3 to the Registration
Statement of Waste Systems on Form S-3, No. 333-37217).
4.2 -- By-laws of Waste Systems (incorporated by reference to Exhibit 4.5
to the Registration Statement of Waste Systems on Form S-3, No.
333-37217).
4.3 -- Registration Rights Agreement dated as of July 2, 1999 by and
between Waste Systems and each of Kevin Baldwin, Kendall Baldwin,
Kelly Baldwin and Kimberly Robb.
4.4 -- Consent of Baldwin, L.P. dated July 2, 1999.
5.1 -- Opinion of Morgan, Lewis & Bockius LLP.
23.1 -- Consent of KPMG LLP.
23.2 -- Consent of Morgan, Lewis & Bockius LLP (filed as part of Exhibit 5).
24.1 -- Power of Attorney (included with the signature page hereof).
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which any 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 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 other material change to such information in the registration statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this 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 being offered therein
and the offering of such securities at the time may be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities which are being registered which remain unsold at the
termination of the offering.
(4) 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 Section 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.
(5) 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 caused 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.
(6) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed by the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company 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 Company 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 of 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 the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lexington, State of Massachusetts on May 8, 2000.
Date: May 8, 2000 WASTE SYSTEMS INTERNATIONAL, INC.
By:/s/ James Elitzak
James Elitzak
Vice President and Chief Financial Officer
(Principal Financial and Accounting
Officer)
POWER OF ATTORNEY
Each person whose signature appears below hereby appoints James Elitzak
as his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and any other registration statement
for the same offering filed pursuant to Rule 462 under the Securities Act of
1933, and to file the same, with all exhibits thereto and all other documents in
connection therewith, with the Commission, granting unto said attorney-in-fact
and agent full power and authority to do and perform each and every act and
thing appropriate or necessary to be done, as fully and for all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date or dates indicated.
Date: May 8, 2000 By: /s/ Philip Strauss
Philip Strauss
Chairman, Chief Executive Officer and
President
(Principal Executive Officer)
Date: May 8, 2000 By: /s/ Robert Rivkin
Robert Rivkin
Executive Vice President--Acquisitions,
Secretary, Treasurer and Director
Date: May 8, 2000 By: /s/ Jay J. Matulich
Jay J. Matulich--Director
Date: May 8, 2000 By: /s/ David J. Breazzano
David J. Breazzano--Director
Date: May 8, 2000 By: /s/ Charles Johnston
Charles Johnston--Director
Date: May 8, 2000 By: /s/ Judy K. Mencher
Judy K. Mencher--Director
Date: May 8, 2000 By: /s/ William B. Philipbar
William B. Philipbar--Director
<PAGE>
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
NUMBER
- ---------- ------------------------------------------------------------------
4.1 -- Amended and Restated Certificate of Incorporation of Waste Systems
(incorporated by reference to Exhibit 4.3 to the Registration
Statement of Waste Systems on Form S-3, No. 333-37217).
4.2 -- By-laws of Waste Systems (incorporated by reference to Exhibit 4.5
to the Registration Statement of Waste Systems on Form S-3, No.
333-37217).
4.3 -- Registration Rights Agreement, dated as of July 2, 1999, by and
between Waste Systems and each of Kevin Baldwin, Kendall Baldwin,
Kelly Baldwin and Kimberly Robb.
4.4 -- Consent of Baldwin, L.P. dated July 2, 1999.
5.1 -- Opinion of Morgan, Lewis & Bockius LLP.
23.1 -- Consent of KPMG LLP.
23.2 -- Consent of Morgan, Lewis & Bockius LLP (filed as part of Exhibit 5)
24.1 -- Power of Attorney (included with the signature page hereof).
<PAGE>
Exhibit 23.1
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.
KPMG LLP
Boston, Massachusetts
May 8, 2000
