Waste Industries' income dips amid privatization effort.
Despite Increased Revenues for fourth-quarter 2007, Raleigh, N.C.-based Waste Industries USA reported a drop in net income for the period, which the company attributes to its recent privatization efforts. For the quarter, the company reported a net income of $5.1 million on revenues of $84.7 million, compared to $5.4 million on revenues of $81.1 million for the same quarter in 2006.
According to the company's proxy materials, professional fees, which included legal fees, special committee fees and fees for a fairness opinion, increased $1.7 million. “These are all usual fees involved in going private,” says Steve Grissom, chief financial officer for Waste Industries USA. Numerous law firms have worked in this process, Grissom adds, and J.P. Morgan Securities was brought in to give an objective opinion to the special committee on the range of values for the company.
On Dec. 18, the company announced it had finalized the offer and increased its offer to $38 per share. However, the next day, a class-action lawsuit was filed in Superior Court of Wake County, N.C., alleging that the original sale price was unfair and that the company's board of directors breached their fiduciary responsibility to shareholders.
The suit is based on the original offer of $36.75, which was made in October 2007 when the merger agreement was first revealed. In February, the plaintiff filed a motion for dismissal, which must go to a hearing before it is approved. Grissom says he no longer considers the suit an obstacle to the privatization effort.
For the year, the company reported a net income of $23.7 million on revenues of $340.7 million, compared to $19.3 million on revenues of $327.5 million in 2006.