UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the
Registrant
x
Filed by a
Party other than the Registrant
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Check the
appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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x
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Definitive Additional Materials
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Soliciting Material under Rule 14a-12
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WCA Waste Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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x
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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1)
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Title of each class of securities to which transaction applies:
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2)
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Aggregate number of securities to which transaction applies:
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3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4)
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Proposed maximum aggregate value of transaction:
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5)
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Total fee paid:
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¨
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Fee paid previously with preliminary materials.
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¨
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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1)
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Amount Previously Paid:
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2)
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Form, Schedule or Registration Statement No.:
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3)
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Filing Party:
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4)
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Date Filed:
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SEC 1913 (11-01)
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Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control
number/
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SUPPLEMENT #1 TO DEFINITIVE PROXY STATEMENT
This supplemental information should be read in conjunction with the Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange
Commission (the SEC) by WCA Waste Corporation (WCA or the Company) on February 8, 2012 (the Definitive Proxy Statement), which should be read in its entirety. Capitalized terms used but not
defined herein have the meanings set forth in the Definitive Proxy Statement.
Litigation Related to the Merger
As previously disclosed on page 53 of the Definitive Proxy Statement, on December 29, 2011, a putative stockholder class action complaint related to
the Agreement and Plan of Merger (the Merger Agreement), by and among the Company, Cod Intermediate, LLC, a Delaware limited liability company (Parent), and Cod Merger Company, Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent (Merger Sub) was filed by Tammy Newman (the Newman Action), a purported stockholder of WCA, in the District Court of Harris County, Texas (the Court). Parent is owned by Macquarie
Infrastructure Partners II U.S., L.P. (MIP II US) and Macquarie Infrastructure Partners II International, L.P (MIP II International). The plaintiff filed an amended complaint on February 3, 2012. The complaint, as
amended alleges that Board of Directors of WCA, WCA, MIP II US and MIP II International violated applicable law by breaching and/or aiding and abetting the other defendants breaches of their fiduciary duties of loyalty, due care, candor,
independence, good faith and fair dealing. Among other remedies sought, the lawsuit seeks to enjoin the proposed Merger, unless and until the Company adopts and implements a procedure or process to obtain a merger agreement providing the highest
possible value for stockholders and discloses all material information to stockholders about the Merger. On February 15, 2012, another putative stockholder class action complaint was filed in the District Court of Harris County, Texas, styled
Graham v. WCA Waste Corp., et al., No. 2012-09500 (the Graham Action). In that suit, the plaintiff purports to assert similar claims against, and seek similar relief with respect to, the same defendants as in the Newman Action. The
Company anticipates that the Graham Action will be consolidated with the Newman Action.
On February 14, 2012, the Company and the other
parties to the Newman and the Graham Actions reached a settlement in principle, which provides for the dismissal with prejudice of the Newman Action and the Graham Action and a release of the defendants by a stockholder class from all present and
future claims asserted in the Newman Action or the Graham Action (or otherwise relating to the Merger) in exchange for, among other things, the supplemental disclosure contained in this Supplement #1. In addition, as part of the settlement in
principle, the Company (or its insurers or successors) has agreed to pay an amount not to exceed $350,000, or such lesser amount as the Court may award, to plaintiffs counsel for their fees and expenses. The proposed settlement is subject to
further definitive documentation and to a number of conditions, including, without limitation, the completion of certain reasonable discovery by the plaintiffs and court approval of the proposed settlement. There is no assurance these conditions
will be satisfied.
The settlement will not affect the merger consideration to be paid to the Companys stockholders in connection with
the proposed merger or the timing of the special meeting of stockholders scheduled for March 8, 2012.
Supplemental Disclosures
WCA and the other defendants vigorously deny all liability with respect to the facts and claims alleged in the Newman Action and the
Graham Action, and specifically deny that any further supplemental disclosure was required or advisable under any rule, statute, regulation or law. Solely to avoid the burden, expense, risk, inconvenience and distraction of continuing the litigation
related to the Newman Action and the Graham Action and to fully and finally resolve the claims alleged in the Newman Action and the Graham Action, WCA and the other defendants have agreed to the proposed settlement described above.
In connection with the settlement in principle of the Newman Action and the Graham Action, WCA agreed to make these supplemental disclosures to the
Definitive Proxy Statement. These additional disclosures should be read in conjunction with the Definitive Proxy Statement, which should be read in its entirety. Without admitting in any way that the disclosures below are material or otherwise
required by law, WCA makes the following supplemental disclosures:
1
The following disclosure supplements the discussion in the fourth paragraph under the
heading Background of the Merger on page 23 of the Definitive Proxy Statement.
Company B did not provide the
Company with specific reasons as to why it would not be able to make a formal proposal at or above $6.25.
The following
disclosure supplements the discussion under the heading Background of the Merger on page 23 of the Definitive Proxy Statement by adding a new fifth paragraph.
The Companys historic strategy has been to seek acquisition opportunities. The Company set an internal target to complete acquisitions during 2011 with an aggregate purchase price of $70 million. By
the second quarter of 2011, the Company had completed the IESI Oklahoma and Emerald Waste acquisitions and had entered into an operating agreement with Stoughton Recycling Technologies that provided an option to acquire the business. The Company
continued to pursue and evaluate potential strategic growth opportunities.
The following disclosure supplements the
discussion under the heading Background of the Merger on page 26 of the Definitive Proxy Statement by adding a new paragraph following the carryover paragraph on page 26 of the Definitive Proxy Statement.
The Companys Board elected not to appoint a special committee to conduct negotiations with Waste Industries because it did not
believe that a committee was necessary or advisable under Delaware law. None of the directors had an interest in the proposed acquiring entity or any other disabling interest. See The MergerInterests of Certain Persons in the
Merger.
The following disclosure supplements the discussion under the heading Selected Comparable Trading
Analysis on page 42 of the Definitive Proxy Statement by adding a new paragraph at the end of that subsection.
In
deriving the foregoing ranges of implied equity value per share, Imperial Capital applied the following indicative trading multiple ranges to WCAs relevant financial metrics:
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Indicative Trading Multiple
Range
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WCAs Financial
Metric
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Pro Forma LTM Revenue
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1.95x to 2.05x
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$
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279.0MM
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Pro Forma LTM EBITDA
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6.6x to 7.6x
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$
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63.1MM
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Pro Forma 2011E Adjusted EBITDA
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6.4x to 7.4x
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$
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62.5MM
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2012E Adjusted EBITDA
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6.2x to 7.2x
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$
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66.0MM
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The following disclosure supplements the discussion under the heading Selected Comparable
Transactions Analysis on page 43 of the Definitive Proxy Statement by adding a new paragraph at the end of that subsection.
In deriving the foregoing ranges of implied equity value per share, Imperial Capital applied the following indicative acquisition multiple ranges to WCAs relevant financial metrics:
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Indicative Trading
Multiple
Range
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WCAs Financial
Metric
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Pro Forma LTM Revenue
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2.04x to 2.14x
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$
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279.0MM
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Pro Forma LTM EBITDA
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7.6x to 8.6x
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$
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63.1MM
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2
The following disclosure supplements the discussion under the heading Discounted
Cash Flow Analysis on page 44 of the Definitive Proxy Statement by inserting the following after the first sentence on that page.
In deriving the weighted average cost of capital, Imperial Capital used the following assumptions:
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Variable
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Value
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Cost of Debt
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5.78
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%
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Marginal Tax Rate
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42
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%
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Risk-free Rate
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2.48
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%
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Equity Risk Premium
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6.70
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%
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Beta
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0.84
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Size Premium
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9.05
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%
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Debt / Capital Ratio
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43.9
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%
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The following disclosure supplements the discussion under the heading Overview of Analyses;
Other Considerations on page 44 of the Definitive Proxy Statement by adding a new paragraph at the beginning of that subsection.
In performing the Selected Comparable Trading Analysis, Selected Comparable Transactions Analysis and the Discounted Cash Flow Analysis, Imperial Capital subtracted the value of the preferred stock
liquidation preference from the calculated equity value. Imperial Capital further concurred with managements determination not to ascribe any additional value to the Companys state and federal net operating losses (NOLs).
Because the Companys ability to utilize its NOLs to offset future taxable income was limited, any resulting value, if any, would be
de minimis
, particularly in comparison to the value of the overall transaction.
Cautionary Statement Concerning Forward-Looking Information
This filing contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Forward-looking
statements generally include discussions and descriptions other than historical information. These forward-looking statements can generally be identified as such because the context of the statement will include words such as trend,
may, annualized, should, outlook, project, intend, seek, plan, believe, anticipate, expect, estimate,
potential, continue, goal, or opportunity, the negatives of these words, or similar words or expressions. The forward-looking statements made herein are only made as of the date of this filing and we
undertake no obligation to publicly update such forward looking statements to reflect subsequent events or circumstances. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially,
such as the possibility that the proposed transaction does not close, including, but not limited to, due to a failure to satisfy the closing conditions, the failure of the stockholders of WCA to approve the proposed transaction, the possibility that
WCA will not obtain necessary regulatory approvals to consummate the proposed transaction and other risk factors detailed in the reports filed with the SEC by WCA.
3
Additional Information and Where to Find It
WCA has filed with the SEC a Definitive Proxy Statement and other relevant materials in connection with the merger described above. The Definitive Proxy Statement was sent or given to the stockholders of
WCA on or about February 8, 2012. Before making any voting or investment decision with respect to the merger, stockholders are urged to read the Definitive Proxy Statement and other relevant materials because they contain important information
about the merger. The Definitive Proxy Statement and other relevant materials, and any other documents filed by WCA with the SEC, may be obtained free of charge at the SECs website at www.sec.gov or at WCAs website at
www.wcaa.com
. The information on WCAs website is not part of this filing, and therefore it not incorporated by reference.
Participants in Solicitation
WCA and
each of its executive officers, directors and other members of its management and employees, under SEC rules, may be deemed to be participants in the solicitation of proxies from WCAs stockholders in favor of the proposed transaction. A list
of the names of WCAs executive officers and directors and a description of their respective interests in WCA are set forth in WCAs annual report on Form 10-K for the fiscal year ended December 31, 2010 and the Definitive Proxy
Statement and other relevant materials filed with the SEC in connection with the merger. Certain executive officers and directors of WCA have interests in the proposed transaction that may differ from the interests of stockholders generally,
including benefits conferred under retention, severance and change in control arrangements and continuation of director and officer insurance and indemnification. These interests and any additional benefits in connection with the proposed
transaction are described in the Definitive Proxy Statement relating to the merger.
4
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