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): February 5, 2007

COVANTA HOLDING CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware	1-6732	95-6021257
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer 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))

TABLE OF CONTENTS

	Item 1.01. Entry into a Material Definitive Agreement.
	Item 8.01. Other Events.
	Item 9.01. Financial Statements and Exhibits.
SIGNATURES
EXHIBIT INDEX
Second Supplemental Indenture
Second Supplemental Indenture
Second Supplemental Indenture
Press Release

Item 1.01. Entry into a Material Definitive Agreement.

     On February 5, 2007, in connection with the previously announced cash tender offers (the “Tender Offers”) and consent solicitations (the “Solicitations”) by Covanta Holding Corporation (“Covanta”) with respect to the following notes (collectively, the “Notes”) issued by indirect subsidiaries of Covanta: (i) 8¹/2% Senior Secured Notes due 2010 issued by MSW Energy Holdings LLC (“MSW Holdings I”) and its wholly-owned subsidiary, MSW Energy Finance Co., Inc. (“MSW Finance I,” and collectively with MSW Holdings I, “MSW I”), (ii) 7⅜% Senior Secured Notes due 2010 issued by MSW Energy Holdings II LLC (“MSW Holdings II”) and its wholly-owned subsidiary, MSW Energy Finance Co. II, Inc. (“MSW Finance II,” and collectively with MSW Holdings II, “MSW II”) and (iii) 6.26% Senior Notes due 2015 of Covanta ARC LLC (“Covanta ARC”), MSW I, MSW II and Covanta ARC, respectively, entered into the following second supplemental indentures (collectively, the “Second Supplemental Indentures”): (i) a Second Supplemental Indenture, dated as of February 5, 2007 (the “MSW I Second Supplemental Indenture”) among MSW I, MSW Energy Hudson LLC (“MSW Hudson”), as the guaranteeing subsidiary and Wells Fargo Bank, National Association, as successor trustee by merger to Wells Fargo Bank Minnesota, National Association (the “MSW I Trustee”), supplementing that certain Indenture, dated as of June 25, 2003, among MSW I and the MSW I Trustee, as previously supplemented by the Supplemental Indenture thereto, dated as of July 11, 2003, among MSW I, MSW Hudson and the MSW I Trustee (the Indenture as previously supplemented, the “MSW I Indenture”); (ii) a Second Supplemental Indenture, dated as of February 5, 2007 (the “MSW II Second Supplemental Indenture”), among MSW II, Covanta Ref-Fuel II LLC (“Ref-Fuel II”), as the guaranteeing subsidiary, and Wells Fargo Bank, National Association, as successor trustee by merger to Wells Fargo Bank Minnesota, National Association (the “MSW II Trustee”), supplementing that certain Indenture dated as of November 24, 2003 among MSW II and the MSW II Trustee, as previously supplemented by the Supplemental Indenture thereto, dated as of December 12, 2003, among MSW II, Ref-Fuel II and the MSW II Trustee (the Indenture as previously supplemented, the “MSW II Indenture”); and (iii) a Second Supplemental Indenture, dated as of February 5, 2007 (the “Covanta ARC Second Supplemental Indenture”), among Covanta ARC, U.S. Bank National Association, as successor trustee (“Covanta ARC Trustee”), and U.S. Bank National Association as successor securities intermediary (the “Securities Intermediary”), supplementing the Indenture dated as of May 1, 2003 among Covanta ARC, the Covanta ARC Trustee and the Securities Intermediary, as previously supplemented by the First Supplemental Indenture thereto, dated as of May 1, 2003 (the Indenture as previously supplemented, the “Covanta ARC Indenture,” the MSW I Indenture, MSW II Indenture and the Covanta ARC Indenture, collectively, the “Indentures”).

     The Second Supplemental Indentures effect certain amendments to the Indentures proposed in connection with the Tender Offers and Solicitations, which will eliminate substantially all of the restrictive covenants and eliminate or modify certain events of default and related provisions contained in the Indentures, including the requirement in the Indentures that MSW I and MSW II file periodic reports with the Securities and Exchange Commission. The amendments will not, however, become operative until the Notes tendered in the Tender Offers are accepted for purchase by Covanta pursuant to the terms of the Tender Offers.

     This summary of the Second Supplemental Indentures is qualified in its entirety by reference to the MSW I Second Supplemental Indenture attached as Exhibit 4.1 hereto, the MSW

II Supplemental Indenture attached as Exhibit 4.2 hereto and the Covanta ARC Second Supplemental Indenture attached as Exhibit 4.3 hereto, each of which is incorporated herein by reference.

Item 8.01. Other Events.

     On February 5, 2007, Covanta issued a press release announcing (i) the receipt of the requisite consents in connection with the Tender Offers and Solicitations with respect to the Notes, (ii) the pricing of the Tender Offers, and (iii) the execution of the Supplemental Indentures. A copy of the press release is attached as Exhibit 99.1 hereto and incorporated herein by reference

Item 9.01. Financial Statements and Exhibits.

(a)      Financial Statements of Business Acquired — Not Applicable

(b)      Pro Forma Financial Information — Not Applicable

(c)      Shell Company Transactions — Not Applicable

(d)      Exhibits

     Exhibit No.      Exhibit

     4.1                    Second Supplemental Indenture, dated as of February 5, 2007, among MSW Energy Holdings LLC, MSW Energy Finance Co., Inc., MSW Energy Hudson LLC, as the guaranteeing subsidiary, and Wells Fargo Bank, National Association, as successor trustee by merger to Wells Fargo Bank Minnesota, National Association.

     4.2                    Second Supplemental Indenture, dated as of February 5, 2007, among MSW Energy Holdings II LLC, MSW Energy Finance Co. II, Inc. Covanta Ref-Fuel II LLC, as the guaranteeing subsidiary, and Wells Fargo Bank, National Association, as successor trustee by merger to Wells Fargo Bank Minnesota, National Association.

     4.3                    Second Supplemental Indenture, dated as of February 5, 2007, among Covanta ARC LLC, U.S. Bank National Association, as successor trustee, and U.S. Bank National Association as successor securities intermediary.

     99.1                  Press Release of Covanta Holding Corporation, dated February 5, 2007

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: February 8, 2007

COVANTA HOLDING CORPORATION (Registrant)
By:	/s/ Timothy J. Simpson
Name:		Timothy J. Simpson
Title:		Senior Vice President, General Counsel and Secretary

COVANTA HOLDING CORPORATION

EXHIBIT INDEX

     Exhibit No.      Exhibit

     4.1                    Second Supplemental Indenture, dated as of February 5, 2007, among MSW Energy Holdings LLC, MSW Energy Finance Co., Inc., MSW Energy Hudson LLC, as the guaranteeing subsidiary, and Wells Fargo Bank, National Association, as successor trustee by merger to Wells Fargo Bank Minnesota, National Association.

     4.2                    Second Supplemental Indenture, dated as of February 5, 2007, among MSW Energy Holdings II LLC, MSW Energy Finance Co. II, Inc. Covanta Ref-Fuel II LLC, as the guaranteeing subsidiary, and Wells Fargo Bank, National Association, as successor trustee by merger to Wells Fargo Bank Minnesota, National Association.

     4.3                    Second Supplemental Indenture, dated as of February 5, 2007, among Covanta ARC LLC, U.S. Bank National Association, as successor trustee, and U.S. Bank National Association as successor securities intermediary.

     99.1                  Press Release of Covanta Holding Corporation, dated February 5, 2007

EX-4.1

Exhibit 4.1

SECOND SUPPLEMENTAL INDENTURE

     SECOND SUPPLEMENTAL INDENTURE, dated as of February 5, 2007 (this “Second Supplemental Indenture”), among MSW Energy Holdings LLC, a Delaware limited liability company (“MSW”), MSW Energy Finance Co., Inc., a Delaware corporation (“MSW Finance” and, together with MSW, the “Company”), MSW Energy Hudson LLC, a Delaware limited liability company (the “Guaranteeing Subsidiary”), and Wells Fargo Bank, National Association, as successor trustee by merger to Wells Fargo Bank Minnesota, National Association, trustee under the Indenture referred to below (the “Trustee”).

W I T N E S S E T H:

     WHEREAS, the Company has duly issued its 8¹/2% Senior Secured Notes due 2010 (the “Notes”) pursuant to an Indenture, dated as of June 25, 2003 (the “Initial Indenture”), among the Company and the Trustee, as supplemented by the Supplemental Indenture thereto (the “Supplemental Indenture” and, together with the Initial Indenture, the “Indenture”), dated as of July 11, 2003, among the Company, the Trustee and the Guaranteeing Subsidiary; and

     WHEREAS, the Company and the Guaranteeing Subsidiary desire to enter into this Second Supplemental Indenture to eliminate from the Indenture substantially all of the covenants and certain events of default contained therein and make certain other changes therein; and

     WHEREAS, pursuant to Section 9.02 of the Indenture, the Company has obtained the consent of the Holders of at least a majority in aggregate principal amount of the Notes, the only outstanding securities issued under the Indenture; and

     WHEREAS, an Officers’ Certificate and an Opinion of Counsel have been delivered to the Trustee in accordance with Sections 9.02, 9.06 and 14.04 of the Indenture; and

     WHEREAS, all things necessary to make this Second Supplemental Indenture a valid agreement of the Company, in accordance with its terms, have been done; and

     WHEREAS, on the execution of this Second Supplemental Indenture by the parties hereto, the provisions hereof will become effective but not operative until the time specified in Section 11 herein.

     NOW, THEREFORE, in consideration of the mutual agreements and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company, the Guaranteeing Subsidiary and the Trustee, agree as follows:

     1. Deletion of Sections in the Initial Indenture Related to Covenants. The provisions of each of the following sections and subsections of the Initial Indenture, including any related cross-references, events of default provisions, defined terms and other references thereto made irrelevant as a result of their deletion, are hereby deleted in their entirety and replaced with the phrase “Intentionally Omitted”:

Section 3.09
Section 4.03
Section 4.04
Section 4.05
Section 4.06
Section 4.07
Section 4.08
Section 4.09
Section 4.10
Section 4.11
Section 4.12
Section 4.13
Section 4.14
Section 4.15
Section 4.16
Section 4.17
Section 4.18
Section 4.19
Section 4.20
Subsection 5.01(4)
Section 5.02.

     2. Deletion of Sections in the Initial Indenture Related to Events of Default. The provisions of each of the following subsections of Section 6.01 of the Initial Indenture, including any related cross-references, defined terms and other references thereto made irrelevant as a result of their deletion, are hereby deleted in their entirety and replaced with the phrase “Intentionally Omitted”:

Subsection 6.01(3)
Subsection 6.01(4)
Subsection 6.01(5)
Subsection 6.01(6)
Subsection 6.01(7)
Subsection 6.01(8)
Subsection 6.01(9)
Subsection 6.01(10)
Subsection 6.01(11).

     3. Deletion of Sections in the Initial Indenture Related to Legal or Covenant Defeasance. The provisions of each of the following subsections of Section 8.04 of the Initial Indenture, including any related cross-references, defined terms and other references thereto made irrelevant as a result of their deletion, are hereby deleted in their entirety and replaced with the phrase “Intentionally Omitted”:

Subsection 8.04(2)
Subsection 8.04(3)

2

Subsection 8.04(5)
Subsection 8.04(6).

     4. Definitions. Capitalized terms used but not defined in this Second Supplemental Indenture shall have the meanings ascribed thereto in the Indenture.

     5. Confirmation of the Indenture. The Indenture, as modified, supplemented and superseded by this Second Supplemental Indenture, is in all respects ratified and confirmed, and the Indenture and this Second Supplemental Indenture shall be read, taken and construed as one and the same instrument. (Reference herein to the Indenture shall be deemed to be to the Indenture, as modified, supplemented and superseded by this Second Supplemental Indenture).

     6. Governing Law. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SECOND SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

     7. Separability. In case any provision in this Second Supplemental Indenture shall for any reason be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

     8. Counterparts. The parties may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

     9. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.

     10. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Second Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company and the Guaranteeing Subsidiary.

     11. Effectiveness and Operativeness. The provisions of this Second Supplemental Indenture will become effective upon execution and delivery hereof and will become operative on the first date that the Company (a) accepts for payment a majority in aggregate principal amount of the outstanding Notes pursuant to the Offer to Purchase and Consent Solicitation Statement dated January 23, 2007, as supplemented by the Supplement thereto dated January 31, 2007 and (b) provides notice of such acceptance to the Trustee.

[Signature Pages Follow]

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     IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed, all as of the date first above written.

MSW ENERGY HOLDINGS LLC
By:	/s/ Mark A. Pytosh
	Name:	Mark A. Pytosh
	Title:	Senior Vice President and Chief Financial Officer
MSW ENERGY FINANCE CO., INC.
By:	/s/ Mark A. Pytosh
	Name:	Mark A. Pytosh
	Title:	Senior Vice President and Chief Financial Officer
MSW ENERGY HUDSON LLC
By:	/s/ Mark A. Pytosh
	Name:	Mark A. Pytosh
	Title:	Senior Vice President and Chief Financial Officer
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee
By:	/s/ Jane Y. Schweiger
	Name:	Jane Y. Schweiger
	Title:	Vice President

EX-4.2

Exhibit 4.2

SECOND SUPPLEMENTAL INDENTURE

     SECOND SUPPLEMENTAL INDENTURE, dated as of February 5, 2007 (this “Second Supplemental Indenture”), among MSW Energy Holdings II LLC, a Delaware limited liability company (“MSW II”), MSW Energy Finance Co. II, Inc., a Delaware corporation (“MSW Finance II” and, together with MSW II, the “Company”), Covanta Ref-Fuel II LLC, a Delaware limited liability company (the “Guaranteeing Subsidiary”), and Wells Fargo Bank, National Association, as successor trustee by merger to Wells Fargo Bank Minnesota, National Association, trustee under the Indenture referred to below (the “Trustee”).

W I T N E S S E T H:

     WHEREAS, the Company has duly issued its 7³/8% Senior Secured Notes due 2010 (the “Notes”) pursuant to an Indenture, dated as of November 24, 2003 (the “Initial Indenture”), among the Company and the Trustee, as supplemented by the Supplemental Indenture thereto, dated as of December 12, 2003 (the “First Supplemental Indenture” and, together with the Initial Indenture, the “Indenture”), among the Company, the Trustee and the Guaranteeing Subsidiary; and

     WHEREAS, the Company and the Guaranteeing Subsidiary desire to enter into this Second Supplemental Indenture to eliminate from the Indenture substantially all of the covenants and certain events of default contained therein and make certain other changes therein; and

     WHEREAS, pursuant to Section 9.02 of the Indenture, the Company has obtained the consent of the Holders of at least a majority in aggregate principal amount of the Notes, the only outstanding securities issued under the Indenture; and

     WHEREAS, an Officers’ Certificate and an Opinion of Counsel have been delivered to the Trustee in accordance with Sections 9.02, 9.06 and 14.04 of the Indenture; and

     WHEREAS, all things necessary to make this Second Supplemental Indenture a valid agreement of the Company, in accordance with its terms, have been done; and

     WHEREAS, on the execution of this Second Supplemental Indenture by the parties hereto, the provisions hereof will become effective but not operative until the time specified in Section 11 herein.

     NOW, THEREFORE, in consideration of the mutual agreements and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company, the Guaranteeing Subsidiary and the Trustee, agree as follows:

     1. Deletion of Sections in the Initial Indenture Related to Covenants. The provisions of each of the following sections and subsections of the Initial Indenture, including any related cross-references, events of default provisions, defined terms and other references thereto made irrelevant as a result of their deletion, are hereby deleted in their entirety and replaced with the phrase “Intentionally Omitted”:

Section 3.09
Section 4.03
Section 4.04
Section 4.05
Section 4.06
Section 4.07
Section 4.08
Section 4.09
Section 4.10
Section 4.11
Section 4.12
Section 4.13
Section 4.14
Section 4.15
Section 4.16
Section 4.17
Section 4.18
Section 4.19
Section 4.20
Subsection 5.01(4)
Section 5.02.

     2. Deletion of Sections in the Initial Indenture Related to Events of Default. The provisions of each of the following subsections of Section 6.01 of the Initial Indenture, including any related cross-references, defined terms and other references thereto made irrelevant as a result of their deletion, are hereby deleted in their entirety and replaced with the phrase “Intentionally Omitted”:

Subsection 6.01(3)
Subsection 6.01(4)
Subsection 6.01(5)
Subsection 6.01(6)
Subsection 6.01(7)
Subsection 6.01(8)
Subsection 6.01(9)
Subsection 6.01(10)
Subsection 6.01(11).

2

     3. Deletion of Sections in the Initial Indenture Related to Legal or Covenant Defeasance. The provisions of each of the following subsections of Section 8.04 of the Initial Indenture, including any related cross-references, defined terms and other references thereto made irrelevant as a result of their deletion, are hereby deleted in their entirety and replaced with the phrase “Intentionally Omitted”:

Subsection 8.04(2)
Subsection 8.04(3)
Subsection 8.04(5)
Subsection 8.04(6).

     4. Definitions. Capitalized terms used but not defined in this Second Supplemental Indenture shall have the meanings ascribed thereto in the Indenture.

     5. Confirmation of the Indenture. The Indenture, as modified, supplemented and superseded by this Second Supplemental Indenture, is in all respects ratified and confirmed, and the Indenture and this Second Supplemental Indenture shall be read, taken and construed as one and the same instrument. (Reference herein to the Indenture shall be deemed to be to the Indenture, as modified, supplemented and superseded by this Second Supplemental Indenture).

     6. Governing Law. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SECOND SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

     7. Separability. In case any provision in this Second Supplemental Indenture shall for any reason be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

     8. Counterparts. The parties may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

     9. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.

     10. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Second Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company and the Guaranteeing Subsidiary.

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     11. Effectiveness and Operativeness. The provisions of this Second Supplemental Indenture will become effective upon execution and delivery hereof and will become operative on the first date that the Company (a) accepts for payment a majority in aggregate principal amount of the outstanding Notes pursuant to the Offer to Purchase and Consent Solicitation Statement dated January 23, 2007, as supplemented by the Supplement thereto dated January 31, 2007 and (b) provides notice of such acceptance to the Trustee.

[Signature Pages Follow]

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     IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed, all as of the date first above written.

MSW ENERGY HOLDINGS II LLC
By:	/s/ Mark A. Pytosh
	Name:	Mark A. Pytosh
	Title:	Senior Vice President and Chief Financial Officer
MSW ENERGY FINANCE CO. II, INC.
By:	/s/ Mark A. Pytosh
	Name:	Mark A. Pytosh
	Title:	Senior Vice President and Chief Financial Officer
COVANTA REF-FUEL II LLC
By:	/s/ Mark A. Pytosh
	Name:	Mark A. Pytosh
	Title:	Senior Vice President and Chief Financial Officer
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee
By:	/s/ Jane Y. Schweiger
	Name:	Jane Y. Schweiger
	Title:	Vice President

EX-4.3

Exhibit 4.3

SECOND SUPPLEMENTAL INDENTURE

     SECOND SUPPLEMENTAL INDENTURE, dated as of February 5, 2007 (this “Second Supplemental Indenture”), among Covanta ARC LLC, formerly known as American Ref-Fuel Company LLC, a Delaware limited liability company (the “Company”), U.S. Bank National Association, as successor trustee under the Indenture referred to below (the “Trustee”) and U.S. Bank National Association as successor securities intermediary under the Indenture referred to below (the “Securities Intermediary”).

W I T N E S S E T H:

     WHEREAS, the Company has duly issued its 6.26% Senior Notes due 2016 (the “Notes”) pursuant to an Indenture, dated as of May 1, 2003 (the “Initial Indenture”), among the Company, the Trustee and the Securities Intermediary, as supplemented by the First Supplemental Indenture thereto, dated as May 1, 2003 (the “First Supplemental Indenture” and, together with the Initial Indenture, the “Indenture”); and

     WHEREAS, the Company desires to enter into this Second Supplemental Indenture to eliminate from the Indenture substantially all of the covenants and certain events of default contained therein and make certain other changes therein; and

     WHEREAS, pursuant to Section 11.2 of the Indenture, the Company has obtained the consent of the Holders of at least a majority in aggregate principal amount of the Notes, the only outstanding securities issued under the Indenture; and

     WHEREAS, an Officers’ Certificate and an Opinion of Counsel have been delivered to the Trustee in accordance with Sections 1.3, 11.2 and 11.3 of the Indenture; and

     WHEREAS, all things necessary to make this Second Supplemental Indenture a valid agreement of the Company, in accordance with its terms, have been done; and

     WHEREAS, on the execution of this Second Supplemental Indenture by the parties hereto, the provisions hereof will become effective but not operative until the time specified in Section 12 herein.

     NOW, THEREFORE, in consideration of the mutual agreements and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company, the Trustee and the Securities Intermediary, agree as follows:

     1. Deletion of Sections in the Initial Indenture Related to Covenants. The provisions of each of the following sections and subsections of the Initial Indenture, including any related cross-references, events of default provisions, defined terms and other references thereto made irrelevant as a result of their deletion, are hereby deleted in their entirety and replaced with the phrase “Intentionally Omitted”:

Section 4.2
Section 4.3
Section 4.4
Section 4.5
Section 4.6
Section 4.7
Section 4.8
Section 4.10
Section 4.11
Section 4.13
Section 4.14
Section 4.15
Section 4.16
Section 4.17
Section 7.14.

     2. Deletion of Sections in the Initial Indenture Related to Events of Default. The provisions of each of the following subsections of Section 7.1 of the Initial Indenture, including any related cross-references, defined terms and other references thereto made irrelevant as a result of their deletion, are hereby deleted in their entirety and replaced with the phrase “Intentionally Omitted”:

Subsection 7.1(3)
Subsection 7.1(4)
Subsection 7.1(5)
Subsection 7.1(6)
Subsection 7.1(7)
Subsection 7.1(8)
Subsection 7.1(11)
Subsection 7.1(12).

     3. Deletion of Sections in the Initial Indenture Related to Defeasance. The provisions of each of the following subsections of Section 13.2 of the Initial Indenture, including any related cross-references, defined terms and other references thereto made irrelevant as a result of their deletion, are hereby deleted in their entirety and replaced with the phrase “Intentionally Omitted”:

Subsection 13.2(e)
Subsection 13.2(f)
Subsection 13.2(g)
Subsection 13.2(h).

     4. Amendment of Minimum Denomination of the Notes in the First Supplemental Indenture. Section 2.2 of the First Supplemental Indenture is herebyamended and restated in its entirety and replaced with the following section:

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SECTION 2.2. Denominations. Each Note created hereby shall be issued in fully registered form without coupons in minimum denominations of $1,000 and integral multiples thereof.

     5. Definitions. Capitalized terms used but not defined in this Second Supplemental Indenture shall have the meanings ascribed thereto in the Indenture.

     6. Confirmation of the Indenture. The Indenture, as modified, supplemented and superseded by this Second Supplemental Indenture, is in all respects ratified and confirmed, and the Indenture and this Second Supplemental Indenture shall be read, taken and construed as one and the same instrument. (Reference herein to the Indenture shall be deemed to be to the Indenture, as modified, supplemented and superseded by this Second Supplemental Indenture).

     7. Governing Law. NEW YORK LAW TO GOVERN. THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW THEREOF TO THE EXTENT THE APPLICATION OF SUCH PRINCIPLES WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.

     8. Separability. In case any provision in this Second Supplemental Indenture shall for any reason be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

     9. Counterparts. The parties may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

     10. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.

     11. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Second Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company.

     12. Effectiveness and Operativeness. The provisions of this Second Supplemental Indenture will become effective upon execution and delivery hereof and will become operative on the first date that the Company (a) accepts for payment a majority in aggregate principal amount of the outstanding Notes pursuant to the Offer to Purchase and Consent Solicitation Statement dated January 23, 2007, as supplemented by the Supplement thereto dated January 31, 2007 and (b) provides notice of such acceptance to the Trustee.

[Signature Pages Follow]

3

     IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed, all as of the date first above written.

COVANTA ARC LLC
By:	/s/ Mark A. Pytosh
	Name:	Mark A. Pytosh
	Title:	Senior Vice President and Chief Financial Officer
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:	/s/ Paul O’Brien
	Name:	Paul O’Brien
	Title:	Vice President
U.S. BANK NATIONAL ASSOCIATION, as Securities Intermediary
By:	/s/ Paul O’Brien
	Name:	Paul O’Brien
	Title:	Vice President

EX-99.1

Exhibit 99.1

COVANTA ANNOUNCES EXPIRATION OF CONSENT PAYMENT DEADLINE, RECEIPT OF
REQUISITE CONSENTS AND PRICING OF TENDER OFFERS

Successful Consent Solicitations relating to the Outstanding 8¹/2% Senior Secured Notes
due 2010 issued by MSW Energy Holdings LLC and MSW Energy Finance Co., Inc.,
7³/8% Senior Secured Notes due 2010 issued by MSW Energy Holdings II LLC and MSW
Finance Co. II, Inc. and 6.26% Senior Notes due 2015 issued by Covanta ARC LLC

Fairfield, New Jersey (February 5, 2007) — Covanta Holding Corporation (“Covanta”) (NYSE:CVA) announced today, in connection with its previously amended tender offers (the “Tender Offers”) and consent solicitations (the “Solicitations”), that as of 5:00 p.m., New York City time, it has received the requisite consents from the holders of (a) the outstanding 8¹/2% Senior Secured Notes due 2010 (the “MSW I Notes”) issued by MSW Energy Holdings LLC (“MSW Holdings I”) and its wholly owned subsidiary, MSW Energy Finance Co., Inc. (“MSW Finance I” and, together with MSW Holdings I, “MSW I”); (b) the outstanding 7³/8% Senior Secured Notes due 2010 (the “MSW II Notes”) issued by MSW Energy Holdings II LLC (“MSW Holdings II”) and its wholly owned subsidiary, MSW Energy Finance Co. II, Inc. (“MSW Finance II” and, together with MSW Holdings II, “MSW II”); and (c) the outstanding 6.26% Senior Notes due 2015 (the “ARC Notes” and, together with the MSW I Notes and the MSW II Notes, the “Notes”) of Covanta ARC LLC (“ARC LLC” and, together with MSW I and MSW II, the “Issuers” and each, an “Issuer”) to amend the applicable indentures governing the Notes. Covanta also has determined the price to be paid in connection with the Tender Offers and the Solicitations for each of the Notes.

The Solicitations for each of the Notes expired today at 5:00 p.m., New York City time (the “Consent Payment Deadline”). At that time, Covanta had received tenders and consents from holders of 97.11% of the outstanding MSW I Notes, 99.67% of the outstanding MSW II Notes and 99.24% of the outstanding ARC Notes, in each case constituting the requisite consents to amend the applicable indentures governing each of the Notes to eliminate substantially all of the restrictive covenants and certain event of default provisions. Each of the Issuers has entered into a supplemental indenture with the respective trustee for the applicable Notes. The supplemental indentures will become operative on acceptance of the Notes for purchase.

The “Total Consideration” to be paid for each Note validly tendered and accepted for payment by the Consent Payment Date, will be equal to (1) $1,096.46 for each $1,000 principal amount of the MSW I Notes, (2) $1,079.92 for each $1,000 principal amount of the MSW II Notes and (3) $729.82 for each $1,000 original principal amount of the ARC Notes.

The Total Consideration for the MSW I Notes was determined by the sum of (a) the price of the MSW I Notes using standard market practice to the target redemption date of September 1, 2007 at a fixed spread of 50 basis points over the bid-side yield on the 4% U.S. Treasury Note due August 31, 2007, at 2:00 p.m., New York City time, on February 5, 2007, minus accrued but unpaid interest to, but not including, the date of purchase plus (b) the amount of accrued but unpaid interest thereon to but not including the date of purchase.

The Total Consideration for the MSW II Notes was determined by the sum of (a) the price of the MSW II Notes using standard market practice to the target redemption date of September 1, 2007 at a fixed spread of 50 basis points over the bid-side yield on the 4% U.S. Treasury Note due August 31, 2007, at 2:00 p.m., New York City time, on February 5, 2007, minus accrued but unpaid interest to, but not including, the date of purchase plus (b) the amount of accrued but unpaid interest thereon to but not including the date of purchase.

The Total Consideration for the ARC Notes was determined by the sum of (a) the price of the ARC Notes using standard market practice based on the present value of all remaining principal and interest payments discounted at a fixed spread of 50 basis points over the bid-side yield on the 4⁵/8% U.S. Treasury Note due December 31, 2011, at 2:00 p.m., New York City time, on February 5, 2007, minus accrued but unpaid interest to, but not including, the date of purchase plus (b) the amount of accrued but unpaid interest thereon to but not including the date of purchase.

The Total Consideration for each Note so tendered includes a consent payment of $30 for each $1,000 principal amount of the MSW I and MSW II Notes and $1,000 original principal amount of the ARC Notes (the “Consent Payment”). Holders whose valid tenders are received after the Consent Payment Deadline, but on or prior to 5:00 p.m., New York City time, on February 21, 2007 (the “Expiration Date”), will receive the Tender Offer Consideration (as defined below) but will not be entitled to receive the Consent Payment. The “Tender Offer Consideration” is the Total Consideration less the Consent Payment.

Covanta’s obligation to accept for purchase and to pay for the Notes validly tendered and consents validly delivered, and not validly withdrawn or revoked, pursuant to the Tender Offers is subject to and conditioned upon the satisfaction of or, where applicable, Covanta’s waiver of, certain conditions including the receipt of proceeds sufficient to finance the Tender Offers and related Solicitations from Covanta’s proposed new financings that were separately announced on January 19, 2007, consisting of offerings of common stock and convertible debentures (both of which have successfully closed) and new senior secured first lien credit facilities of Covanta’s wholly owned subsidiary, Covanta Energy Corporation, which proceeds, together with cash on hand, are sufficient to fund the tender offers. The Tender Offers are also subject to customary closing conditions. If any of the conditions are not satisfied, Covanta is not obligated to accept for payment, purchase or pay for, or may delay the acceptance for payment of, any tendered Notes, and may terminate the Tender Offers. Full details of the terms and conditions of the Tender Offers are described in more detail in the Offer to Purchase and Consent Solicitation Statement dated January 23, 2007, as supplemented by the Supplement thereto dated January 31, 2007 (as supplemented, the “Offer to Purchase”).

Lehman Brothers Inc. is acting as exclusive dealer manager and solicitation agent for each of the Tender Offers and related Solicitations. The information agent and tender agent for each of the tender offers is D.F. King & Co., Inc. Questions regarding the Tender Offers and related Solicitations of consents may be directed to Lehman Brothers Inc., telephone number (800) 438-3242 (toll free) and (212) 528-7581 (call collect). Requests for copies of the Offer to Purchase and related documents may be directed to D.F. King & Co., Inc., telephone number (800) 758-5378 (toll free) and (212) 269-5550 (banks and brokerage firms). Detailed contact information for D.F. King & Co., Inc. is also provided in the Offer to Purchase.

This announcement is not an offer to purchase, a solicitation of an offer to sell, or a solicitation of consents with respect to the Notes nor is this announcement an offer to sell or solicitation of an offer to purchase new securities. The tender offers and related solicitations of consents are

made solely by means of Covanta’s Offer to Purchase and related Letter of Transmittal and Consent.

Covanta Holding Corporation is a New York Stock Exchange listed company engaging in waste disposal, energy services and specialty insurance through its subsidiaries. Covanta’s subsidiary, Covanta Energy Corporation, is an internationally recognized owner and operator of energy-from-waste and power generation projects.

About the Issuers

ARC LLC owns partnerships that develop, own and operate energy-from-waste facilities, which combust municipal solid waste and produce energy in the form of electricity and steam. Through such partnerships, ARC LLC owns or controls six energy-from-waste facilities located in the northeastern United States (the “ARC operating facilities”). The subsidiaries of ARC LLC that operate the ARC operating facilities derive revenues principally from disposal or tipping fees received for accepting waste and from the sale of electricity and steam produced by the ARC operating facilities.

Each of MSW Holdings I and MSW Holdings II hold indirectly a 50% interest in ARC LLC. MSW Finance I and MSW Finance II were each formed in 2003 solely for the purpose of serving as a co-issuers of the MSW I Notes and the MSW II Notes, respectively, in order to facilitate the offering of the MSW I Notes and the MSW II Notes. Other than serving as a co-issuers of the MSW I Notes and MSW II Notes, neither MSW Finance I nor MSW Finance II have any operations or assets and do not have any revenues.

Contact:

Gavin Bell
Phone: 973-882-7107
Email: gbell@covantaholding.com

Cautionary Note Regarding Forward Looking Statements

Certain statements in this press release may constitute “forward-looking” statements as defined in Section 27A of the Securities Act of 1933 (the “Securities Act”), Section 21E of the Exchange Act of 1934 (the “Exchange Act”), the Private Securities Litigation Reform Act of 1995 (the “PSLRA”) or in releases made by the Securities and Exchange Commission, all as may be amended from time to time. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Covanta and its subsidiaries, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements that are not historical facts are forward-looking statements. Forward-looking statements can be identified by, among other things, the use of forward-looking language, such as the words “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “may,” “will,” “would,” “could,” “should,” “seeks,” or “scheduled to,” “proposed”, or other similar words, or the negative of these terms or other variations of these terms or comparable language, or by discussion of strategy or intentions. These cautionary statements are being made pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of obtaining the benefits of the “safe harbor” provisions of such laws. Covanta and the Issuers

caution investors that any forward-looking statements made by Covanta or the Issuers are not guarantees or indicative of future performance. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements with respect to Covanta include, but are not limited to, those factors, risks and uncertainties that are described in Item 1A of its Annual Report on Form 10-K for the year ended December 31, 2005, its Quarterly Report on Form 10-Q for the period ended September 30, 2006, and in other securities filings by Covanta or its subsidiaries and with respect to the Issuers, include but are not limited to those factors, risks and uncertainties that are described in Item 1A “Risk Factors” of MSW I and MSW II’s respective Annual Reports on Form 10-K for the year ended December 31, 2005 and of the MSW I and MSW II joint Quarterly Report on Form 10-Q for the period ended September 30, 2006, and in other securities filings by MSW I and MSW II.

Although Covanta and the Issuers believe that their plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, actual results could differ materially from a projection or assumption in any of forward-looking statements. Covanta’s and the Issuers’ future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The forward-looking statements contained in this prospectus supplement and related prospectus and registration statement are made only as of the date hereof and neither Covanta nor the Issuers have any obligation to update or revise any forward-looking statements whether as a result of new information, subsequent events or otherwise, unless otherwise required by law.