Summary
Republic Services, Inc. (RSG) filed an 8-K on November 26, 2007, to disclose significant developments regarding its wholly-owned subsidiary, Republic Services of Ohio II, LLC, and the Countywide Recycling and Disposal Facility in East Sparta, Ohio. The facility is facing potential license suspension by the Stark County Health Department following a recommendation from the County Health Commissioner. This recommendation stems from environmental conditions attributed to a chemical reaction, which have led to Final Findings and Orders (F&Os) from the Ohio Environmental Protection Agency (OEPA). RSG believes its subsidiary has diligently complied with OEPA directives and that the facility does not pose an environmental threat, with indications that the reaction is subsiding. If the Health Board suspends the operating license, RSG anticipates closing the facility and recording substantial non-cash charges of up to approximately $90 million for asset impairment and $10 million for accelerated closure and post-closure activities. Additionally, the company would forgo an estimated $15 million in projected annual operating cash flows from Countywide starting in 2008, which has an estimated remaining life of 20 years. RSG intends to vigorously contest the recommendation through legal remedies and pursue financial contributions from third parties for compliance and potential closure costs.
Key Highlights
- 1Potential suspension of the Countywide Recycling and Disposal Facility's operating license by the Stark County Health Department.
- 2Environmental conditions at the facility are attributed to a chemical reaction, leading to Final Findings and Orders (F&Os) from the Ohio EPA.
- 3Republic Services believes its subsidiary has complied with OEPA requirements and the facility is not an environmental threat.
- 4If the license is suspended, Republic Services expects to close the facility and incur up to $90 million in asset impairment charges and $10 million for closure activities.
- 5The company anticipates foregoing approximately $15 million in annual operating cash flows from the facility starting in 2008.
- 6Republic Services plans to pursue legal remedies to prevent license suspension and seek financial contributions from third parties for compliance and closure costs.