WM to plans sale of Wheelabrator to Energy Capital Partners

By Erin Voegele | July 31, 2014

Waste Management Inc. has reported second quarter financial results and announced an agreement to sell its waste-to-energy (WTE) business, Wheelabrator Technologies Inc., to an affiliate of Energy Capital Partners for $1.94 billion. The transaction is expected to close during the last two months of the year.

Wheelabrator owns or operates 17 WTE facilities and four independent power-producing facilities in the U.S. that process more than 7.5 million tons of waste and have a combined electric generating capacity of 853 MW. It also has four ash monofill landfills, three transfer stations and an ongoing development and construction project in the U.K. During 2013, the business generated approximately $845 million in total revenue.

During a call to discuss the quarterly results, David Steiner, president and CEO of WM, elaborated on the reasons for the sale. The WTE business has two distinct components, he said, including the tipping feeds MW receives on the front end, and the payments for energy on the back end. “We did not view the energy payments as strategic and we do not have the depth of energy expertise that Energy Capital Partners has,” he said. As part of the transaction, Steiner said MW has entered a front end wastes supply agreement to supply feedstock to certain Wheelabrator facilities. As a result, MW will continue to supply waste to several Wheelabrator plants, but will no longer have the volatility of the financial results related to Wheelabrator electricity sale.

“ECP is excited about our acquisition of Wheelabrator given its excellent operating track record of critical assets, and talented and entrepreneurial employees,” said Tyler Reeder, a partner in Energy Capital Partners, in a statement published by WM. “We believe Waste Management’s strong waste supply capabilities well complement ECP’s deep experience in power generation; and we look forward to continuing to provide Wheelabrator customers and partners with the same continued excellent service they have enjoyed under Waste Management’s ownership.”

Regarding WM’s quarterly results, the company reported revenues of $3.56 billion, up slightly from $3.53 billion for the same period of 2013. Net income for the quarter was $210 million, or 45 cents per diluted share, compared with $244 million or 52 per diluted share, for the same period of last year.