EnergySolutions to be sold to private equity firm

Published: Monday, Jan. 7 2013 4:00 p.m. MST

Energy Solutions crews work at the facility in Clive, Utah Aug. 19, 2011.

Jeffrey D. Allred, Deseret News

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SALT LAKE CITY — Day-to-day operations at Utah's only low-level radioactive waste disposal facility should not change, and the name of EnergySolutions Arena will stay — at least for a few more years — in light of the surprise announcement of EnergySolutions' pending sale.

Company officials Monday said EnergySolutions has entered into an acquisition agreement with private equity firm Energy Capital Partners for $1.1 billion.

Under the agreement, which was approved unanimously by EnergySolutions' board of directors, current management of the company will remain in place, and shareholders will receive a buyout of their stock at 20 percent over its average closing price for the period ending Jan. 4.

The stock's purchase price of $3.75 per share follows the company's tumultuous financial ride over the past six months, including an announcement that it planned to sell off its assets to cut its debt.

In November, Financial News Network said EnergySolutions was among three companies in the environmental and facilities services industry with the highest debt in a calculation that compares revenue with earnings.

Aiming to save $35 million annually, the company eliminated 265 jobs from of its 5,000-person workforce in October. About 70 to 80 employees, both at the Clive disposal facility in Tooele County and at the main Salt Lake City offices, were among those impacted.

The workforce reductions followed a management shakeup in June in which president and chief executive officer Val Christensen was replaced by David Lockwood.

On Monday, Lockwood said the pending transaction represents a compelling value for shareholders and boost of investment capital that will allow the company to expand its disposal and decommissioning business.

The pending sale also helps secure the future of EnergySolutions in the nuclear waste disposal and decommissioning arena, the president and CEO said.

"As a private company with substantial financial backing, we will be able to better manage our business for the long-term in order to serve the best interests of our customers, employees, joint venture partners and other stakeholders," Lockwood said.

Tyler Reeder, a partner at Energy Capital Partners, said the deal will allow EnergySolutions to expand its businesses with government agencies and tap into partnerships with large engineering and construction firms.

"We look forward to investing capital in support of management's strategic vision to continue to expand the company's business both in North America and internationally," Reeder said.

News of the pending transaction was received warily by EnergySolutions watchdogs.

“We need to remain vigilant that the new EnergySolutions follows the law and doesn't jeopardize the health and safety of Utahns,” said Christopher Thomas, HEAL Utah's executive director. 

“We worry that a private equity firm, part of a sector known for typically pushing to aggressively cut costs and grow revenue, may sacrifice safety standards for quick returns on their new investment,” Thomas said.

The ECP acquisition of EnergySolutions is subject to customary closing conditions, including regulatory approvals in the U.S. and U.K. and clearance under the Hart-Scott-Rodino Act. In addition, the transaction is subject to approval by EnergySolutions stockholders.

New York-based law firm Harwood Feffer said Monday it would investigate potential claims against EnergySolutions' board, given the pending transaction.

"Our investigation concerns whether the EnergySolutions board of directors is fulfilling its fiduciary duties, maximizing the value of its company, disclosing all material benefits and costs and obtaining full and fair consideration for the company's shareholders," according to a statement from the law firm.

Under the terms of the merger agreement, EnergySolutions may solicit superior proposals from third parties through Feb.  6.

In connection with the sale, EnergySolutions plans to submit relevant materials with the Securities and Exchange Commission, including a proxy statement.

Standard & Poor announced Monday that it was placing it ratings on EnergySolutions — including the company's B corporate credit score — on CreditWatch, with developing implications.

EnergySolutions has been around since 2004, when it was known as Envirocare of Utah and was purchased by Steve Creamer.

E-mail: amyjoi@desnews.com, Twitter: amyjoi16

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