8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 4, 2005

DANIELSON HOLDING CORPORATION

(Exact name of Registrant as Specified in Its Charter)

Delaware	1-6732	95-6021257
(State or Other Jurisdiction of	(Commission	(I.R.S. Employer
Incorporation)	File Number)	Identification No.)

40 Lane Road
Fairfield, New Jersey	07004

(Address of principal executive offices) (Zip Code)

(973) 882-9000

(Registrant’s telephone number, including area code)

_______________________________________________________
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12(b))

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 7.01. Regulation FD Disclosure.

     Beginning on March 4, 2005, Credit Suisse First Boston and Goldman Sachs Credit Partners, L.P. will provide certain information concerning Danielson Holding Corporation (the “Company”) and its wholly-owned subsidiary, Covanta Energy Corporation (“Covanta”), to third-party prospective lenders in connection with a debt financing package necessary to finance the acquisition of American Ref-Fuel Holdings Corp., as well as to refinance the existing recourse debt of Covanta and provide additional liquidity for the Company. These materials contain certain previously undisclosed information which is attached hereto as Exhibit 99.1 and incorporated herein by reference. This information includes certain non-GAAP financial information set forth under the heading “Non-GAAP Financial Measures” in Exhibit 99.1.

     The information in this Form 8-K and Exhibit 99.1 is furnished pursuant to Item 7.01, “Regulation FD Disclosure,” and, except as shall be expressly set forth by specific reference in such filing, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

Item 9.01. Financial Statements and Exhibits.

(a)	Financial Statements of Business Acquired — Not Applicable
(b)	Pro Forma Financial Information — Not Applicable
(c)	Exhibits

Exhibit No.	Exhibit
99.1	Certain information provided to and by Goldman Sachs Credit Partners, L.P. and
	Credit Suisse First Boston

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: March 4, 2005
 
DANIELSON HOLDING CORPORATION
(Registrant)
 
By: /s/ Timothy J. Simpson                      

Name: Timothy J. Simpson,
Title: Senior Vice President, General Counsel and Secretary

DANIELSON HOLDING CORPORATION

EXHIBIT INDEX

Exhibit No.	Exhibit
99.1	Certain information provided to and by Goldman Sachs Credit Partners, L.P. and
	Credit Suisse First Boston

EX-99.1

EXHIBIT 99.1

Certain information provided to and by
Goldman Sachs Credit Partners, L.P. and Credit Suisse First Boston

Pro forma for the recently announced acquisition of American Ref-Fuel Holdings Corp. (“ARC”), approximately 85% of Covanta Energy Corporation’s (“Covanta” or the “Company”) revenues will come from the domestic waste to energy business and approximately 70% of total pro forma revenue will be generated under contracts with a remaining term of at least 5 years.

* * *

As of December 31, 2004, the size of Danielson Holding Corporation’s net operating loss carry forwards was estimated to be in excess of $500 million.

* * *

Capitalization of Covanta and ARC on a Pro Forma Basis ($mm)

Pro Forma 9/30/04 Cap Table
	Cash		Debt		xLTM Adj.						xLTM Adj.
Capitalization	Amount		Amount		EBITDA 1			Net Debt			EBITDA 1
Project Level Restricted Cash	$	364.0
ARC Non-recourse Project Debt				534.2		1.0	x
Covanta Non-recourse Project Debt				930.0		2.8
Total Non-recourse Project Debt	$	364.0		1,464.2		2.8	x	$	1,100.2	4		2.1x
Other Recourse Project Debt				251.2		3.3
ARC 6.26% Sr Nts due 2015				253.0		3.8
MSW I 8.500% Sr Sec Nts due 2010				200.0		4.2
MSW II 7.375% Sr Sec Nts due 2010				225.0		4.6
Total Project and Intermediate Debt	$	364.0	$	2,393.4		4.6	x	$	2,029.4	4		3.9x
Covanta Corporate Level Unrestricted Cash		152.0
New First Lien Term Loan				250.0		5.1
Total First Priority Debt	$	516.0	$	2,643.4		5.1	x	$	2,127.4	4, 5		4.1x
New Second Lien Term Loan / Notes				450.0		5.9
Total Debt	$	516.0	$	3,093.4		5.9	x	$	2,577.4			5.0x
Market Equity2				1,587.8		9.0
Total Capitalization	$	516.0	$	4,681.2

Selected Pro Forma Operating Assumptions and Credit Statistics

Assumed Adj. EBITDA/Interest		2.9	x
(Assumed Adj. EBITDA-CapEx)/Interest		2.6
Revenue	$	1,166
Adjusted EBITDA		519
Capex3		53
Interest6		178

^1. LTM Adjusted EBITDA of $519mm based on $277mm for ARC and an Adjusted EBITDA of $242mm for Covanta.

^2. Represents market cap as of 2-Mar-05 pro forma for a cash equity contribution of $400mm.

^3. See Investments in Facilities for Covanta, see Additions of PP&E for ARC.

^4. Includes Project Level Restricted Cash of $364mm.

^5. Includes Corporate Unrestricted Cash of $152mm.

^6. Includes all the interest at MSW Energy Holdings LLC and MSW Energy Holdings II LLC.

* * *

Asset Summary of Covanta and ARC on a Pro Forma Basis

Private		Initial Service	PPA		Waste		Gross
WTE Facility		Agreement	Expiration		Disposal		Electric
Location	State	Expiration	Date		(TPD)		Output (MW)			Technology
Fairfax	Virginia	2011		2015		3,000		79	4	Martin
SEMASS	Massachusetts	2005-2016		2015		2,700		79	4	RDF
Essex	New Jersey	2020		2021		2,700		70		DB
Hempstead	New York	2009		2009		2,505		72	4	DB
Indianapolis	Indiana	2008		2008		2,362		6	3	Martin
Niagara Falls	New York	2007-2012		2014		2,250		50	3	DB / RDF
Haverhill	Massachusetts	NA		2019		1,650		45		Martin
Onondaga1	New York	2015		2025		990		37		Martin
Alexandria	Virginia	2013		2023		975		22		Martin
Stanislaus	California	2010		2010		800		22		Martin
Huntington1	New York	2012		2012		750		24		Martin
Babylon	New York	2019		2019		750		17		Martin
SECONN	Connecticut	2015		2017		689		18		DB
Bristol	Connecticut	2014		2014		650		16		Martin
Marion	Oregon	2014		2014		550		13		Martin
Lake	Florida	2014		2014		528		14		Martin
Wallingford	Connecticut	2010		2010		420		11		Other
Warren2	New Jersey	2008		2013		400		12		Martin
Total						24,669		607

1	Facilities are limited partnerships
2	In bankruptcy.
3	Facility has been designed to export steam for sale.
4	Net electric output.

Public		Initial Service	PPA		Waste		Gross
WTE Facility		Agreement	Expiration		Disposal		Electric
Location	State	Expiration	Date		(TPD)		Output (MW)		Technology
Detroit	Michigan	2009		2008		2,832		68 2	RDF
Delaware1	Pennsylvania	2017		2016		2,688		79 3	RDF
Honolulu	Hawaii	2010		2015		2,160		57	RDF
Hartford	Connecticut	2012		2012		2,000		69	RDF
Montgomery	Maryland	2016		2006		1,800		63	Martin
Union1	New Jersey	2023	NA			1,440		42	Martin
Hennepin	Minnesota	2018		2018		1,212		39	Martin
Lee	Florida	2014		2015		1,200		37	Martin
Lancaster	Pennsylvania	2011		2016		1,200		33	Martin
Hillsborough	Florida	2007		2010		1,200		29	Martin
Pasco	Florida	2011		2024		1,050		30	Martin
Huntsville	Alabama	2016		2016		690	Steam		Martin
Kent	Michigan	2010		2022		625		17 2	Martin
Total						17,265		563

1	Facilities are under long term leases.
2	Facilities have been designed to export steam for sale.
3	Net electric output.

International Projects

The Company owns a series of fossil fuel based power projects which sell the electricity and steam they generate under long-term contracts or market concessions to utilities, governmental agencies providing power distribution, industrial users, or local governmental units. In select cases, such sales of electricity and steam may be provided under short-term arrangements as well. Similarly, the Company seeks to obtain long-term contracts for fuel supply from reliable sources.

Facility				Ownership
Location	Country	Gross MWs		(%)			Fuel	Offtaker
Quezon	Philippines		510		26	%	Coal	Manilla Elec Co.
Haripur	Bangladesh		126		45	%	Natural Gas	Governmental Agency
Madurai	India		106		77	%	Fuel Oil	State Electricity Board
Samalpatti	India		106		60	%	Fuel Oil	State Electricity Board
Huantai	China		36		60	%	Coal	Provincial State Board
Yangiang	China		24		96	%	Coal	Provincial State Board
Lin’an	China		24		60	%	Coal	Provincial State Board
Trezzo1	Italy		18		13	%	WTE	GRTN2
Rio Volcan	Costa Rica		17		1	%	Hydroelectric	O & M Contracts
Don Pedro	Costa Rica		14		1	%	Hydroelectric	O & M Contracts
Total			981

1	Covanta has a minority stake in Trezzo
2	Gestore della Rete di Transmission Nazionale (State owned national grid operator).

* * *

Material Deleveraging

Due to Covanta’s stable and contracted cash flows, the Company will delever substantially over the coming years. In the next five years, scheduled principal repayments on existing debt total more than $900 million, all of which will be funded from operating cash flow.

Pro Forma Debt

Thus for the 18 privately owned facilities of Covanta and ARC, there is substantial deleveraging of owned assets. For Covanta, the ARC acquisition adds materially to its base of assets which it can continue to operate after existing contracts expire and project debt is paid off.

* * *

Superior Operating History with Proven Technology

Covanta’s facilities utilize proven technology with a history of high availability. The vast majority of Covanta’s plants utilize the Martin technology and are characterized by high reliability, high energy efficiency and low emissions owing to modern combustion technology and highly effective flue gas cleaning systems. To date, Covanta has processed more than 132 million tons of waste in its facilities with an average availability of over 90%.

Covanta Average Availability

* * *

Non-GAAP Financial Measures

The following summarizes unaudited non-GAAP financial measures for Covanta. Certain items are included in the Historical Financials below that are not measured under U.S. generally accepted accounting principles (“GAAP”) and are not intended to supplant other information provided by Covanta in accordance with GAAP. Furthermore, these measures may not be comparable to those used by other companies. The following information should be read in conjunction with the Historical Financials set forth below. Adjusted EBITDA means, for any period, EBITDA plus additional items deducted from net income, as provided below, that have been made to EBITDA. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net income as indicators of Covanta’s performance or any other measures of performance derived in accordance with GAAP. The presentation of Adjusted EBITDA is intended to enhance the usefulness of the financial information by providing a measure which management uses as an indicator of Covanta’s ability to meet financial covenants and to assess performance. Adjusted EBITDA for each of the periods set forth in the Historical Financials below is reconciled to net income, which is believed to be the most directly comparable measure of GAAP.

Historical Financials of Covanta

Covanta

													2001-2003
($ in millions)	2001			2002			2003			LTM 9/30/04			CAGR
Income Statement
Service	$	561		$	494		$	499		$	476
Electricity and Steam		232			289			278			241
Construction		63			42			13			3
Other		62			0			0			0
Total Revenues	$	918		$	826		$	790		$	721			(7.2%)
Plant Operating Expense		528			528			502			456
Construction Costs / Project Development		103			47			20			6
Depreciation and Amortization		78			77			72			69
SG&A		79			54			36			40
Net Interest on Project Debt		86			86			77			54
Write-downs of Assets Held for Use1		0			85			17			17
Write-downs of Assets Held for Sale		187			0			0			0
Cost of Goods Sold		37			0			0			0
Loss on Sale of Business		3			2			7			8
Total Operating Costs and Expenses	$	1,102		$	879		$	730		$	649
EBIT 2	$	(184	)	$	(53	)	$	60		$	72		NA
Investment in Subsidiaries		(61	)		(21	)		(22	)		(11	)
Reconciliation to Adjusted EBITDA
Net income (loss)	$	(231	)	$	(179	)	$	44		$	106
Loss (gain) from discontinued operations, net of income taxes		25			43			(79	)		(64	)
Cumulative effect of change in accounting principles, net of income taxes		0			8			9			0
Gain (loss) from continuing operations before discontinued operations and change in accounting principles	$	(206	)	$	(128	)	$	(27	)	$	42
Depreciation and amortization		78			77			72			69
Net interest on project debt		86			86			77			54
Net interest on recourse debt		47			44			40			40
Interest income		(8	)		(2	)		(3	)		(2	)
Income taxes		(6	)		(0	)		(13	)		226
Minority interests		6			9			9			9
Change in unbilled service receivables		(2	)		10			18			7
Non-cash compensation		0			0			0			0
Reorganization items		0			49			83			84
Gain of cancellation of pre-petition debt		0			0			0			(511	)
Fresh start adjustments		0			0			0			215
Loss on sale of businesses		3			2			7			8
Write-downs of Assets Held for Use1		0			85			17			17
Write down of assets held for sale		187			0			0			0
Reclass of arena commitment write down		0			0			0			(14	)
Total adjustments	$	391		$	360		$	307		$	201
Adjusted EBITDA1	$	186		$	233		$	280		$	242			22.8%

1.	“Assets held for use” includes charges relating to the following discrete events, each of which is related to a disposition of a non-core business in the Covanta bankruptcy or to entities that have declared bankruptcy or are being liquidated, and accordingly none are capable of recurrence:
	•	During 2002, relating to impairment of the contract value on Covanta’s Bataan energy project in the Philippines, because a potential contract extension in 2004 was determined to be unlikely ($37.2 million). This contract was subsequently terminated in 2004 and the project’s assets are currently being sold for scrap.
	•	During 2002, relating to impairment of the contract value on Covanta’s Magellan energy project in the Philippines, because of material fuel price increases without corresponding increases in electricity tariffs ($41.7 million). This project subsequently filed for bankruptcy protection in the Philippines.
	•	During 2002, relating to impairment of the contract value on Covanta’s entertainment business in Ottawa, Canada which it disposed of as part of its bankruptcy in 2003 ($6.0 million).
	•	During 2003, relating to the disposition of Covanta’s entertainment business in Ottawa, Canada during the 4th quarter, 2003 ($17.0 million). Because this event occurred during the 4th quarter, 2003, this charge is reflected both in the 2003 column and the LTM 9/30/04 column.
2.	EBIT has not been reduced by minority interest or increased for equity income from unconsolidated subs.