Primary Energy Recycling review does not result in sale of company

By Angela McDaniels and Jennifer Lanning Drey

Tacoma, Wash., and Portland, Ore., June 19 - Primary Energy Recycling Corp.'s board of directors has decided to pursue a recapitalization of the company instead of a sale, according to a company news release.

The board began a strategic review last year that resulted in the decision to pursue the sale of the company or Primary Energy Recycling Holdings LLC.

The company retained Credit Suisse Securities (USA) LLC and Genuity Capital Markets as its financial advisers to conduct a two-stage auction.

The board reviewed the final bids and concluded that none of the offers would provide enough value to the company's securityholders and that the proposed recapitalization is the best alternative for the company, according to the release.

The recapitalization plans include the refinancing of the company's $135 million term loan facility due Aug. 24, 2009 with a new amortizing senior debt facility, the conversion of its 11¾% subordinated notes into common shares and a 1-for-17 reverse stock split.

The failure to approve the proposed recapitalization and refinance the term loan prior to maturity would cause the company to be in default under the term loan, the company said.

The plan is subject to approval by the company's securityholders and the Supreme Court of British Columbia.

In preparation for refinancing and to reduce the loan amount under the new credit facility, the board has suspended the payment of cash dividends on the company's common shares and distributions on the common membership interests of Primary Energy Recycling Holdings.

"While cash flow sweeps and the elimination of the dividend upon conversion may be less than ideal for some investors, this plan is critical to meeting our refinancing objectives and is the best alternative," John Prunkl, consultant to the board of directors, said during a conference call held Friday to discuss the transaction.

Primary Energy Recycling owns a majority interest in Primary Energy Recycling Holdings, an Oak Brook, Ill.-based company that operates recycled energy projects and has a 50% interest in a pulverized coal facility.

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