8-K 1 cov-8k_1126.txt 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): November 21, 2003 Covanta Energy Corporation -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 1-3122 13-5549268 -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission File (IRS Employer of Incorporation) Number) Identification No.) 40 Lane Road, Fairfield, New Jersey 07004 -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (973) 882-9000 Not Applicable -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Item 3. Bankruptcy or Receivership. As previously reported, on April 1, 2002 (the "Petition Date"), Covanta Energy Corporation, a Delaware corporation ("Covanta"), and its affiliated debtor subsidiaries (each a "Debtor" and, collectively with the Company, the "Debtors") filed their respective voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the "Court"). The reorganization cases are being jointly administered under the caption "In re Ogden New York Services, Inc. et al., Case No. 02-40826." During the course of the proceedings, the Debtors have operated their respective businesses and managed their respective properties and assets as debtors-in-possession. On September 5, 2003, Covanta and certain of its subsidiaries (collectively, the "Sellers") executed an ownership interest purchase agreement (as amended, the "Original Agreement") with certain affiliates of ArcLight Energy Partners Fund I, L.P. and Caithness Energy, L.L.C (collectively, the "Stalking Horse Buyers") providing, among other things, for the sale of the Sellers' interests in Heber Geothermal Company, Heber Field Company, Second Imperial Geothermal Company, Mammoth-Pacific L.P (a non-debtor affiliate of Covanta) and related assets (the "Geothermal Business"), subject to higher or better offers. The Original Agreement entitled the Stalking Horse Buyers to a break-up fee of $5,375,000 (the "Break-Up Fee") in the event that a higher or better offer was chosen in the auction. The purchase price under the Original Agreement was $170,000,000, subject to adjustment. In connection with the proposed sale, on September 8, 2003, certain of the Debtors, including AMOR 14 Corporation, Covanta SIGC Energy, Inc., Covanta SIGC Energy II, Inc., Heber Field Company, Heber Geothermal Company and Second Imperial Geothermal Company, L.P. (collectively the "Heber Debtors") filed the Joint Plan of Reorganization Under Chapter 11 Of The Bankruptcy Code (as amended, the "Heber Plan") and the related disclosure statement (as amended, the "Disclosure Statement"). On September 24, 2003, the Heber Debtors filed the Heber Debtors' First Amended Joint Plan Of Reorganization Under Chapter 11 Of The Bankruptcy Code and the related Disclosure Statement. On September 29, 2003, the Court entered an order approving the competitive bidding and auction procedures, including the Break-Up Fee, for the purpose of obtaining the highest or best offer for the Geothermal Business (the "Bidding Procedures Order"). On October 3, 2003, the Court entered an order approving the Disclosure Statement and, among other things, authorizing the distribution of the Heber Plan to affected creditors and parties in interest. The Heber Debtors made certain non-material revisions to the Heber Plan and filed the Heber Debtors' Second Amended Joint Plan Of Reorganization Under Chapter 11 Of The Bankruptcy Code on October 13, 2003. In accordance with the Court's order, the Heber Debtors distributed copies of the Disclosure Statement and the Heber Plan to all creditors of the Heber Debtors and all parties to the contracts and leases that would be assumed and/or assigned under the Heber Plan. All non-insider classes of claims against and interests in the Heber Debtors were deemed to accept the Heber Plan pursuant to 11 U.S.C. 1126(f) and were therefore not entitled to vote on the Heber Plan. On November 19, 2003, the Court held an auction to consider bids for the Geothermal Business pursuant to the Court-approved bidding procedures. During the auction, Covanta and its creditor representatives considered various bids for the Geothermal Business. Following the auction, Covanta, with the consent of its creditor representatives, determined that the bid submitted by certain affiliates of Ormat Nevada, Inc. ("Ormat"), which offered a purchase price of $214,000,000, subject to adjustment, represented the highest or best offer for the Geothermal Business. On November 21, 2003, the Court entered an Findings Of Fact, Conclusions Of Law And Order Under 11 U.S.C. ss. 1129 And Rule 3020 Of The Federal Rules Of Bankruptcy Procedure (i) Confirming The Heber Debtors' Third Amended Joint Plan Of Reorganization Under Chapter 11 Of The Bankruptcy Code And (ii) Approving The Sale Of Certain Interests To The Successful Bidder (the "Confirmation Order"), thereby confirming the Heber Plan and approving the sale of the Geothermal Business to Ormat pursuant to a purchase agreement that was executed on November 21, 2003. A copy of the Confirmation Order is attached hereto as Exhibit 2.2 and is incorporated herein by reference. On the same date, the Heber Debtors made certain non-material revisions to the Heber Plan and filed the Heber Debtors' Third Amended Joint Plan Of Reorganization Under Chapter 11 Of The Bankruptcy Code. A copy of the Heber Plan, as confirmed by the Court, is attached hereto as Exhibit 2.1. Because Ormat's bid was determined to be the highest or best offer for the Geothermal Business, as required by the Original Agreement and the Bidding Procedures Order, Covanta will pay the Stalking Horse Buyers the Break-Up Fee. Although the Court has entered the Confirmation Order, the Heber Plan is not yet effective. The Heber Plan and the Confirmation Order contain certain conditions precedent to the occurrence of the Effective Date of the Heber Plan, unless waived pursuant to the Heber Plan. One such condition is the closing of the sale of the Geothermal Business, which is expected to occur prior to the end of the year, and is subject to customary conditions precedent. The Effective Date of the Heber Plan has not yet occurred. Summary of Heber Plan The following is a summary of the material features of the Heber Plan and is qualified in its entirety by reference to the Heber Plan itself. Capitalized terms used but not defined herein shall have the meanings assigned to them in the Heber Plan. Among other things, the Heber Plan provides that all non-insider creditors of the Heber Debtors shall be paid in full and will not be impaired under the Heber Plan. Subject to the terms of the Heber Plan, the Company or its subsidiaries are generally responsible, either directly or through certain purchase price adjustments, for payment of amounts due to holders of Claims under the Heber Plan. Pursuant to the Heber Plan, all material contracts and leases related to the Geothermal Business are being assumed by the applicable Debtors and, as necessary, assigned to Ormat. The implementation of the Heber Plan is predicated upon the closing of the sale of the Geothermal Business. Summary of Distributions to be made by the pursuant to the Heber Plan -------------------------------------------------------------------------------- Claims Description Treatment Under Heber Plan -------------------------------------------------------------------------------- Class 1 Claims: Allowed Priority Each holder of an Allowed Class 1 Claim Non-Tax Claims shall receive, in full settlement, release and discharge of its Class 1 Claim, either (i) Cash, on the Distribution Date, in an amount equal to such Allowed Claim, or (ii) such other less favorable terms as Covanta and the holder of an Allowed Priority Non-Tax Claim agree; provided, however, that no agreement under subsection (ii) above shall impose any obligation upon the Reorganized Heber Debtors beyond the payment of amounts calculated in accordance with the Working Capital Adjustment. -------------------------------------------------------------------------------- Class 2H Claims: Allowed GECC Secured The holder of the Allowed Subclass 2H-A Claims, which is divided into two Claims shall retain, unaltered, the Subclasses (i) Subclass 2H-A (Allowed legal, equitable and contractual rights, GECC Secured SIGC Claims) and (ii) including, without limitation, any valid Subclass 2H-B (Allowed GECC Secured and perfected Liens that secure such HGC/HFC Claims) Allowed Claim, provided, however, that the assets of the Heber Debtors subject to the GECC Liens may be sold, subject to such GECC Liens, as part of the Geothermal Sale contemplated by the Heber Reorganization Plan; provided, further, if GECC consents to the sale of the Equity Interests in SIGC Project Company pursuant to Section 2.1 of the Alternative Transaction Purchase Agreement, the holder of Allowed Subclass 2H-A Claims shall release any and all Liens, Claims and encumbrances in the Equity Interests and assets of SIGC One Sub, SIGC Two Sub, Amor and any other Debtors (other than SIGC Project Company). Covanta shall pay to each holder of an Allowed Subclass 2H-B Claim, in full settlement, release and discharge of its Subclass 2H-B Claim, either (i) Cash, on the Effective Date, in an amount equal to such Allowed Subclass 2H-B Claim, or (ii) such other less favorable terms as Covanta and the holder of an Allowed GECC Secured HGC/HFC Claim agree provided, however, that no agreement under subsection (ii) above shall impose any obligation upon the Reorganized Heber Debtors beyond the payment of amounts calculated in accordance with the Working Capital Adjustment. -------------------------------------------------------------------------------- Class 3H: Allowed Secured Claims On the Effective Date, the legal, equitable and contractual rights of the holders of Allowed Class 3H Claims will be reinstated in full satisfaction, release and discharge of their respective Class 3H Claims and will remain unaltered, except as the relevant Heber Debtor (or, on or after the Effective Date, Reorganized Heber Debtor) and the holders of Allowed Class 3H Claims may otherwise agree or as such holders may otherwise consent. Notwithstanding the foregoing, no contractual provisions or applicable law that would entitle the holder of an Allowed Class 3H Claim to demand or receive payment of such Claim prior to the stated maturity of such Claim, terminate any contractual relationship or take such other enforcement action (as may be applicable) from and after the occurrence of a default that occurred prior to the Effective Date shall be enforceable against the Reorganized Heber Debtors. In lieu of the foregoing, any Heber Debtor (or, on or after the Effective Date, Reorganized Heber Debtor) may, at its election, make a Cash payment to the holder of an Allowed Class 3H Claim equal to the full amount of the holder's Allowed Class 3H Claim, together with interest at the legal rate to the extent required by law, in full settlement, release and discharge of such Class 3H Claim. -------------------------------------------------------------------------------- Class 7 Claims: Allowed Unsecured On the Distribution Date, each holder of Claims an Allowed Class 7 Claim shall receive, in full settlement, release and discharge of its Class 7 Claim, a Cash payment equal to the full amount of its Allowed Class 7 Claim, together with interest at the legal rate to the extent required by law. -------------------------------------------------------------------------------- Class 8 Claims: Heber Intercompany The legal, equitable and contractual Claims rights of holders of Heber Intercompany Claims in respect of such claim shall not be affected, altered or Impaired under the Heber Reorganization Plan. -------------------------------------------------------------------------------- Class 9 Claims: Intercompany Claims On the Effective Date, all Intercompany Claims shall be cancelled, annulled and extinguished. Holders of such Claims shall receive no Distributions in respect of Class 9 Claims. -------------------------------------------------------------------------------- Class 14 Equity Interests: Equity Holders of Allowed Class 14 Equity Interests in Heber Debtors Interests shall not receive any Distribution under the Heber Reorganization Plan in respect of Class 14 Equity Interests. Class 14 Equity Interests, upon the Effective Date, shall continue to be held by one or more of the Reorganized Heber Debtors or Debtor Sellers, as the case may be, with such Equity Interests held by the Debtor Sellers to be transferred by the Debtor Sellers to the Buyers at the Closing pursuant to the terms of the Alternative Transaction Purchase Agreement. -------------------------------------------------------------------------------- As of November 1, 2003, Covanta had 49,824,251 shares of common stock outstanding. None of Covanta's authorized common stock has been reserved for future issuances in respect of claims and interests filed and allowed under the Heber Plan. For financial information regarding the assets and liabilities of the Debtors refer to the Quarterly Report for Covanta Energy Corporation on Form 10-Q for the quarterly period ended September 30, 2003. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Financial Statements of business acquired: [Not applicable]. (b) Pro forma financial information: [Not applicable]. (c) Exhibits: 2.1 Heber Debtors' Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code. 2.2 Findings of Fact, Conclusions of Law and Order confirming the Heber Debtors' Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code and Approving the Sale of Certain Interests to the Successful Bidder dated November 21, 2003. 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 hereto duly authorized. Date: November 26, 2003 COVANTA ENERGY CORPORATION By: /s/ Jeffrey R. Horowitz --------------------------------- Name: Jeffrey R. Horowitz Title: Senior Vice President, General Counsel and Secretary