Covanta Holding tenders for three notes series

By Jennifer Chiou

New York, Jan. 23 - Covanta Holding Corp. announced the start of a cash tender offer for any and all of the 8½% senior secured notes due 2010 issued by MSW Energy Holdings LLC and MSW Energy Finance Co., Inc.; the 7 3/8% senior secured notes due 2010 issued by MSW Energy Holdings II LLC and MSW Finance Co. II, Inc.; and the and 6.26% senior notes due 2015 issued by Covanta ARC LLC.

The company is also soliciting consents to eliminate substantially all of the restrictive covenants and certain events of default in the note indentures.

Covanta said that the offers are part of its recapitalization plan.

For each $1,000 principal amount of 8½% notes, Covanta is offering to pay the present value of $1,042.50, the redemption value of the notes on Sept. 1, 2007 - the notes' first call date - discounted using the bid-side yield on the 4% Treasury due Aug. 31, 2007 plus 50 basis points, minus accrued interest to the purchase date.

For each $1,000 principal amount of 7 3/8% notes, the company will pay the present value of $1,036.88, the redemption value of the notes on Sept. 1, 2007 - the notes' first call date - discounted using the bid-side yield on the 4% Treasury due Aug. 31, 2007 plus 50 bps, minus accrued interest to the purchase date.

For each $1,000 principal amount of 6.26% notes, Covanta said it will pay an amount equal to the present value of all remaining interest and principal payments, discounted using the bid-side yield on the 4 5/8% Treasury due Dec. 31, 2011 plus 50 bps, minus accrued interest to the purchase date.

The company said it will also pay accrued interest to the purchase date.

Those who tender by 5 p.m. ET on Feb. 5, the consent deadline, will receive the $30.00 consent payment, which is included in the payouts.

The offers end at 5 p.m. ET on Feb. 21.

Pricing will be determined at 2 p.m. ET on Feb. 5.

The offers are conditioned upon, among other things, the receipt of proceeds sufficient to finance the tender offers and tenders from a majority of noteholders.

Lehman Brothers Inc. is the dealer manager and solicitation agent (800 438-3242 or call collect 212 528-7581). D.F. King & Co., Inc. is the information agent (800 758-5378 or call collect 212 269-5550).

Fairfield, N.J.-based Covanta Holding develops, owns and operates infrastructure for the conversion of energy from waste, waste disposal, renewable energy production and independent power production.

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