Waste Associates LLC.

Situation

• In 2007, Waste Associates, LLC (“Waste Associates” or the “Company”), a vertically integrated regional waste management and recycling company, completed a leveraged recapitalization and the acquisition of a regional scrap metal recycler. Within months of closing these transactions, the Company’s hedge fund lender was overwhelmed by redemptions and notified the Company that it would no longer be able to provide revolver financing under the terms of its loan agreements and that it wanted to be refinanced early.
• Over subsequent months, although the Company made substantial progress in finding a new lender, the refinancing process was ultimately derailed when the Company’s scrap metal recycling division incurred substantial losses as scrap metal prices fell over 80% in the span of only a few weeks, forcing the Company to sell the division in a distressed sale.
• By the end of 2009, because of the impact of the weak economy and growing capital expenditure needs, the Company was no longer able to fund its operations with internally generated cash.
• BlackEagle saw the intrinsic value of the base business through the noise of the recession and the overleveraged balance sheet, and acquired the senior debt at a substantial discount, following that up with an out-of-court restructuring which also converted the Company’s subordinated debt to equity. All of the restructuring was completed within 45 days from the signing of the letter of intent.
• Today, Waste Associates has a strong balance sheet that provides it with sufficient liquidity to support the growth of its operations. In addition, the Company is now actively pursuing several add-on acquisitions.

Thesis

• Acquire a leading independent waste management company with a construction and demolition debris landfill at a distressed valuation in an attractive geographic market where such landfill capacity is increasingly scarce.
• Leverage the significant waste industry transaction experience of the BlackEagle principals by partnering with a talented waste industry entrepreneur, whose growth plans had previously been constrained by an over leveraged balance sheet, and then pursuing an aggressive growth strategy that includes both organic initiatives and targeted acquisitions.
• Implement the BlackEagle Operating System to improve performance, reduce costs, and increase the profitability of the Company’s existing operations.
• Invest in a business whose success was not dependent on a recovery from 2009 recession volumes and whose major revenues were primarily derived from long term contracts with a core group of customers.

“BlackEagle has been a great partner for Waste Associates. Their detailed focus on operations has been critical in helping us better understand the profitability of each of our lines of business. As a result, we have been able to capture significant operating cost savings. BlackEagle has also been very supportive of our growth and acquisition plans and has brought a high level of discipline to the identification and evaluation of acquisition targets.”

Mathew P. Appelget
President & Chief Executive Officer
Waste Associates, LLC