Big city waste contractor in bankruptcy sale

Bill Massa, President and CEO of Synagro, goes undercover to clean a tank of 27-year-old sludge and also discovers a flaw that goes against one of the company's goals as part of the "Undercover Boss" TV show in 2011.
Bill Massa, President and CEO of Synagro, goes undercover to clean a tank of 27-year-old sludge and also discovers a flaw that goes against one of the company's goals as part of the "Undercover Boss" TV show in 2011. (Studio Lambert)
Posted: April 26, 2013

Synagro Technologies Inc., one of the largest contractors working with city government, filed for bankruptcy Wednesday as part of its planned sale to a European private equity group.

Synagro president and chief executive officer Eric Zimmer said the Chapter 11 filing in Delaware would not affect the firm's South Philadelphia plant, which turns human waste into fertilizer and fuel.

Houston-based Synagro, which has long been financially squeezed, is owned by another equity firm, Carlyle Group.

The bankruptcy is an interim step in Synagro's sale to Sweden's EQT Infrastructure II within the next 90 days. The deal is valued at $455 million, Synagro said. Under EQT's ownership, it will continue to use the name Synagro.

Zimmer said there would be no changes in the company's 23-year contract with the city, worth $590 million - one of the largest agreements Synagro has with any municipality.

The Philadelphia operation is funded by general revenue bonds, similar to plants in Baltimore and Sacramento, Calif. The facilities in the three cities are being sold directly to EQT and are not part of the bankruptcy, Zimmer said.

"That gives additional stability to our Philadelphia facility," he said.

Zimmer said city officials got notice of the sale, which was in the works for about a year. He said the city supported the plan.

Zimmer said Synagro, the nation's largest processor of sludge and wastewater, has sufficient funds to pay suppliers until the sale is completed.

Mayor Nutter's spokesman, Mark McDonald, said the company briefed the city on the impending filing and "assured the city that the services provided by the company will continue uninterrupted and that the sale of assets will make the company a stronger partner going forward."

"You have the premier bio-solvent management company," Zimmer said. "It is performing exceptionally well."

He said the plant at 7800 Penrose Ferry Rd., near the Platt Memorial Bridge, recently won accolades from a clean-water advocacy group.

The administration of former Mayor John F. Street developed the initial plan to privatize the smelly 70-acre city plant by hiring an outside contractor. But Synagro's steps in winning the contract were unusual.

U.S. District Judge Stewart Dalzell once characterized the process as being "a primer on how to procure multimillion-dollar service contracts with the City of Philadelphia."

Synagro brought in an Atlanta consultant, Hiriam Hicks, who Dalzell said paid a Philadelphia community activist to round up 175 people - some from homeless shelters - to cheer on City Council as it approved Synagro's contract by a 15-2 vote, with the backing of Mayor Nutter.

Hicks later sued Synagro, saying it failed to pay him for his work in helping the firm with the Philadelphia contract.

Zimmer said the suit, which the company settled, was "based on a claim that was unsubstantiated." He declined to disclose the amount of the settlement.


Contact Mark Fazlollah at 215-854-5831 or mfazlollah@phillynews.com.

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