City of Montgomery, Alabama, purchases IREP recycling facility

City of Montgomery, Alabama, purchases IREP recycling facility

After prolonged bankruptcy court proceedings, city purchases the MRF.

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January 9, 2018
DeAnne Toto
Mergers and Acquisitions Municipal Recycling Municipal Solid Waste

The Infinitus Renewable Energy Park (IREP) recycling facility in Montgomery, Alabama, has been purchased by that city, according to a report by the Montgomery Advertiser. The MRF, which recovered recyclables from municipal solid waste (MSW), was built for $35 million and claimed to be able to recover for recycling nearly 60 percent of the material delivered to its door. With the addition of waste to energy and composting, IREP said it would see a landfill diversion rate topping 90 percent.

According to the Montgomery Advertiser report, the city finalized the deal Dec. 29, 2017, paying $625,000 for the facility and $320,000 in other fees and taxes.

The city and its Solid Waste Disposal Authority signed an agreement in July of 2016 to acquire the material recovery facility (MRF) and an adjacent lot from IREP once bankruptcy proceedings were completed. The city finally closed on that bankruptcy agreement with IREP in December 2017 after it had been locked in bankruptcy court since August 2016 because holders of bonds issued by IREP in 2014 opposed the sale, saying they had a better claim to the facility than the city did, the newspaper reports. To finalize the deal, the city had to pay the agreed upon sale price of $625,000 as well as $125,000 in other fees (including IREP's legal fees) and $195,000 in property taxes IREP owed and accrued after the company closed the facility in October 2015, Barry Crabb, Montgomery's finance director, told the newspaper.

The city reached a settlement with the 2014 bondholders to complete the sale, the newspaper reports. However, Crabb told the Montgomery Advertiser he was unable to disclose the terms of the settlement because of a confidentiality provision in the settlement. Crabb added that the city is "in the process of seeking consent to disclose the terms."

After opening in April 2014, IREP closed the facility in October 2015, citing commodity pricing that was unable to support the recycling process. Kyle Mowitz, Infinitus CEO, said at the time of the closure, “One key element of a successful materials recycling program is the ability to sell recovered material at a price that will support the recycling process. While our customers have been satisfied with the material we have reclaimed, unfortunately the market price for these materials have dropped dramatically.”

When the MRF was built, the city was obligated to deliver 100,000 tons of MSW annually, paying a tipping fee for the material. Whatever material was not recovered for recycling, composting or energy recovery at IREP was to be delivered to the city’s landfill, and IREP would pay the city a tipping fee.

The Montgomery Advertiser reports that IREP owed the city $2.5 million for trash sent to the landfill in its first year of operation. The paper says the city forgave that amount because of the “small recycling numbers they were achieving,” as Crabb told the paper at that time.