Covanta Energy seeks approval for first lien letter of credit facility

By Jeff Pines

Washington, Feb. 23 - Covanta Energy Corp. is seeking approval for a $138.19 million first lien letter of credit facility being arranged by Merrill Lynch Pierce Fenner & Smith as part of its exit financing.

Covanta entered into a letter agreement for the facility with the Merrill Lynch unit and Bank of America, NA and Deutsche Bank AG's New York branch.

According to a Feb. 20 filing with the U.S. Bankruptcy Court for the Southern District of New York, the facility will have a 100 basis point facility fee with a $1.38 million underwriting fee.

Covanta, a Fairfield, N.J., power generation and water and waste water company, needs court approval to pay the underwriting fee and to reimburse Merrill Lynch for expenses.

The company said it has discussed the facility with the its agent banks' lawyers, the official committee of unsecured creditors and the informal committee of 9¼% debenture holders and expects to have their consents before the hearing on the motion scheduled for Feb. 26.

Covanta filed for Chapter 11 on April 1, 2002. The company's second disclosure statement was confirmed in January. Covanta's Chapter 11 case number is 02-40826.

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