EnergySolutions Inc. (ES:NYSE) shareholders are set to vote Friday on whether to end the company’s time as a publicly traded entity and merge with a private equity firm.
But, on the eve of that vote, it remained unclear if shareholders will accept the proposed offer of $4.15 cash per share from Energy Capital Partners.
And that’s casting some uncertainty on the future of the Salt Lake City-based nuclear waste company, which operates the nation’s busiest disposal site for low-level radioactive waste in the Utah desert about 80 miles west of its headquarters.
Company spokesman Mark Walker said EnergySolutions would not comment on the vote.
But, in a presentation to shareholders last week, the company’s board pressed shareholders to back the $1.1 billion deal they originally announced in January and sweetened earlier this month.
The board pointed out that shareholders would get a 58 percent premium, based on the share price in the six months prior. The board also noted that two years of failed efforts to secure a better deal means there is "no other viable solution" if the merger falls through.
In addition, company leaders painted a bleak picture for EnergySolutions if shareholders reject the deal on Friday, with such projects as its re-bid of an important cleanup and nuclear plant contract in the United Kingdom on the line.
The consequences could include "financial instability and potential breach of covenants," the shareholder presentation said, "with uncertain options for resolution."
The shareholder presentation directly disputed the report from the previous week by Institutional Shareholder Services (ISS) urging shareholders to vote against the deal.
An influential proxy advisory firm, ISS said the $33.5 million in golden parachutes for the company’s top executives was "excessive" and complained the "low performance goal and the timing of the award raise further concerns." ISS also questioned the way the company was accounting for a $200 reserve for its cleanup of an Illinois reactor and predicting even less waste going to the Utah disposal site.
The company’s largest shareholder, Carlson Capital LP, had threatened to oppose the original proposal in January to pay $3.75 per share. Once the board boosted it to $4.15, it joined other critics in announcing support.
Regulators in Utah, Tennessee, Ohio and South Carolina already have signed off on the change of ownership.
And prospects for the company’s mile-square disposal site in Utah seemed to brighten on Wednesday when the Texas Senate approved a bill that appears to divert low-level radioactive waste from a competing disposal site in Texas and send it to Utah.
HEAL Utah, a frequent critic of EnergySolutions in Utah, said it was concerned shareholders might approve the deal after all.
"Public companies at least are obligated to divulge information which journalists, watchdogs and concerned citizens can scrutinize," said Christopher Thomas, the environmental group’s executive director. "We are fearful that the new owners won’t recognize they need to be open with Utahns."
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