Summary of Advantages of
Sale of SPSA’s
WTE Facilities
Presented to
SPSA Member Communities
February 2010
Benefits of Selling WTE
Facilities
• Reduce SPSA debt by approx. $142 million
• Reduce debt service: average 60+% less
• Reduce capital expenditures
– Cell VII expansion: $30 million
– Two new transfer stations: $22 million
• Reduce operational expenses
• Extend landfill life through diversion of non-
processables
• Reduce operational risks and complexity –
more certainty
2
SPSA Financial Viability
• SPSA system remains unchanged
– WTE Facilities owned by Wheelabrator
but remains part of SPSA system through
the service agreements (i.e. commitment
of municipal waste to Wheelabrator)
– Suffolk Landfill (SPSA)
– Transfer Stations (SPSA)
– Other services (SPSA)
• Use and Support Agreements valid
• Funding of system remains same
3
through the tipping fees
Key VRA Requirements
• Member community guarantee of
outstanding reduced VRA debt
(~$50M) (See slide 6 and 7 for
lenders’ positions)
• Debt retirement plan
– Proportional debt reduction among
lenders
– Levelized remaining debt service
• Inter-creditor agreements among
4
SPSA lenders
Debt Retirement Plan
• Options Considered
– Pro rata reduction of all debt (Ambac, Wachovia,
VRA, and Virginia Beach) – levelize remaining
debt service.
– Retire all but VRA 2009 bonds and City of
Virginia Beach debt (Considered a “non-starter
with the VRA and CAO’s), backloads debt
service (sinking fund considered)
– Pro rata reduction of all but Wachovia debt,
which allows for full payback of Virginia Beach
loan (note: approach is acceptable to Wachovia)
5
Allocation of Guarantees
Source: Mesirow Financial
6
Pro-Rata Scenario
with VA Beach Takeout
Outstanding Principal After Pro-rata Scenario with VA Beach Takeout
Unrefunded Debt Service
VRA
VRA
% of
FY
AMBAC
Wachovia
VA Beach
Subordinate Guaranteed Total Debt
Total
2011
4,080,000
4,080,000
5.27%
2012
90,000
5,230,000
3,250,000
8,570,000
11.07%
2013
95,000
5,260,000
4,805,000
10,160,000
13.13%
2014
100,000
8,460,000
2,045,000
10,605,000
13.70%
2015
5,590,000
885,000
3,000,000
9,475,000
12.24%
2016
5,885,000
2,880,000
3,435,000
12,200,000
15.76%
2017
3,480,000
9,650,000
13,130,000
16.97%
2018
9,170,000
9,170,000
11.85%
Total
11,760,000
18,950,000
21,425,000
25,255,000
77,390,000 100.00%
% of Total
15.20%
24.49%
0.00%
27.68%
32.63%
100.00%
Note: Excludes certain maturities for which funds have already been deposited with the Trustee.
FY
2011
2012
2013
2014
2015
2016
2017
2018
Total
VRA
6,133,981
5,184,501
6,546,890
3,582,102
5,312,199
7,582,042
13,965,206
9,388,704
57,695,624
Aggregate
7,479,941
11,657,754
12,838,758
12,746,190
11,336,199
13,614,167
13,965,206
9,388,704
93,026,919
Principal Obligation by Municipality - Pro-rata Scenario with VA Beach Takeout
FY
% Obligation
2011
2012
2013
2014
2015
2016
2017
2018
Total
7
Chesapeake
Franklin
Isle of Wight
Norfolk
Portsmouth
Southampton
County Virginia Beach
Suffolk
22.49%
0.97%
3.98%
16.98%
10.27%
2.10%
30.34%
12.87%
917,592
730,925
1,080,645
459,921
873,737
1,420,244
2,952,937
2,062,333
10,498,332
39,576
31,525
46,609
19,837
37,685
61,256
127,361
88,949
452,796
162,384
129,350
191,239
81,391
154,623
251,337
522,574
364,966
1,857,864
692,784
551,850
815,889
347,241
659,673
1,072,287
2,229,474
1,557,066
7,926,264
419,016
333,775
493,474
210,022
398,990
648,551
1,348,451
941,759
4,794,036
85,680
68,250
100,905
42,945
81,585
132,615
275,730
192,570
980,280
1,237,872
986,050
1,457,837
620,453
1,178,709
1,915,971
3,983,642
2,782,178
14,162,712
525,096
418,275
618,404
263,192
500,000
812,741
1,689,831
1,180,179
6,007,716
Source: Mesirow Financial
Total
4,080,000
3,250,000
4,805,000
2,045,000
3,885,000
6,315,000
13,130,000
9,170,000
46,680,000
Project Savings
Fiscal Year
Chesapeake
2011
$ 12,997,000
2012
$ 12,273,000
2013
$ 14,194,000
2014
$ 13,155,000
2015
$ 5,958,000
2016
$ 3,944,000
2017
$ 3,201,000
2018
$ (1,750,000)
Totals
$ 63,972,000
*Fiscal Year July-June
Franklin
$ 629,000
$ 594,000
$ 685,000
$ 633,000
$ 286,000
$ 189,000
$ 153,000
$ (83,000)
$ 3,086,000
Isle of Wight
$ 2,649,000
$ 2,520,000
$ 2,935,000
$ 2,741,000
$ 1,251,000
$
833,000
$
682,000
$
(375,000)
$ 13,236,000
$
$
$
$
$
$
$
$
$
Norfolk
10,668,000
9,965,000
11,403,000
10,455,000
4,684,000
3,068,000
2,463,000
(1,332,000)
51,374,000
Portsmouth
$ 6,253,000
$ 5,850,000
$ 6,703,000
$ 6,155,000
$ 2,762,000
$ 1,812,000
$ 1,455,000
$
(789,000)
$ 30,201,000
Southampton
County
$ 1,249,000
$ 1,180,000
$ 1,365,000
$ 1,266,000
$ 574,000
$ 380,000
$ 308,000
$ (169,000)
$ 6,153,000
$
$
$
$
$
$
$
$
$
Note: FY 2018 is a partial year. Use and support agreements expire January 24, 2018
8
Virginia
Beach
2,750,000
4,415,000
(2,389,000)
4,776,000
$
$
$
$
$
$
$
$
$
Suffolk
-
$
$
$
$
$
$
$
$
$
Total
Projected
Savings
34,445,000
32,382,000
37,285,000
34,405,000
15,515,000
12,976,000
12,677,000
(6,887,000)
172,798,000
Note: FY 2018 is a partial year. Use and support agreements expire January 24, 2018
9
Note: FY 2018 is a partial year. Use and support agreements expire January 24, 2018
10
Source: SPSA Pro Forma, January 26, 2009, Pro Rate Debt Reduction,
some variation may occur based on final debt retirement plan results
Bottom Line: Member communities will spend less
for solid waste disposal through 2018 if the WTE
Facilities are sold.
11
Status
• Responses to VRA Resolutions submitted
•
•
•
•
•
•
12
on Jan. 29
Volume cap requested from Governor
Requesting member community guarantees
in February
Inter-creditor agreements being finalized
Met with VRA Feb. 8-9
Final VRA approval Mar. 2010
Other consents being perfected for a
closing before May 1, 2010