The Carlyle Group LP-owned company, which had been co-headquartered in Baltimore and Houston, said Wednesday that it would use bankruptcy to restructure debt and sell its assets to EQT Infrastructure in a $455 million deal. The company filed for a Chapter 11 reorganization of its debts in U.S. Bankruptcy Court in Delaware and said it expects the sale to be completed in two to three months.
As part of a plan to strengthen the balance sheet and position the company for growth, Synagro decided in early April to close the Houston co-headquarters and make White Marsh its corporate home, a spokesman said. The company plans to increase its employment from 41 to nearly 100.
"We are going to be creating about 50 jobs here in Baltimore over the next three months," including positions in finance, legal, human resources and technical departments, said Jamie Kinder, the company spokeswoman.
Synagro calls itself the largest recycler of industrial and municipal organic waste in the United States. It has a contract with Baltimore to operate and provide equipment at Patapsco Wastewater Treatment Plant on Asiatic Avenue and Back River Wastewater Treatment Plant on Eastern Avenue.
The plants treat wastewater for the city, and Synagro recycles the byproducts for use as fertilizer and as an energy source, said Tom Becker, a company spokesman. The plants' assets, and wastewater treatment plants in Philadelphia and Sacramento, will be included in the sale to EQT but not in the Chapter 11 filing, the company said.
The Carlyle Group's infrastructure fund borrowed heavily to take Synagro private in 2007 in a $772 million deal.
That deal left Synagro vulnerable when municipalities cut spending on wastewater treatment and other environmental projects in the aftermath of the 2008 financial crisis. The company also lost major contracts in New York City and Detroit.
Moody's said the company defaulted on its debt earlier this month. It said Synagro had a $290 million first-lien term loan due in April 2014 and a $150 million second-lien term loan due in October 2014.
As part of the bankruptcy filing, Synagro said Wednesday that some of its existing lenders have committed to providing $30 million of debtor-in-possession financing, subject to court approval, to allow the company to operate through the completion of the sale. The buyer EQT Infrastructure is a fund operated by a Stockholm, Sweden-based private equity firm. It invests in companies in the United States, Asia, and Northern and Eastern Europe.
EQT "believes both in our business and in the future of Synagro," Synagro CEO Eric Zimmer said in a statement.
Founded in 1986, Synagro employs 800 people in 34 states, according to its website. The company serves more than 600 municipal and industrial water and wastewater facilities throughout the U.S.
Reuters contributed to this article