Covanta Energy Corporation working with co-agent banks for extension on master credit facility

FAIRFIELD, NJ, January 30, 2001 — Covanta Energy Corporation announced today that it is working with its bank group co-agents for requisite bank group approval and satisfaction of conditions for an amendment to its Master Credit Facility (formally known as the Revolving Credit and Participation Agreement), which would grant Covanta, among other things, an extension of its covenant waivers.

The proposed amendment extends the covenant waivers through March 31, 2002, conditioned on the company achieving certain cash maintenance goals as of February 28, 2002. Absent this agreement, the waivers would expire on January 31, 2002.

The co-agents to the agreement are circulating this amendment to the Facility’s larger bank group and recommending approval of its terms. While the company is reasonably confident that approval will be obtained and that all conditions will be met, no assurance can be given until a majority of the bank group approves the extension and the conditions are satisfied. Given the number of banks involved, Covanta does not expect a definitive response until some time next week.

“We are pleased that the co-agents have recommended additional time and flexibility to allow us to continue the strategic evaluation of our business,” said Scott G. Mackin, Chief Executive Officer and President of Covanta Energy. “Our core energy and water operations continue to perform well, despite the difficult economic environment. The proposed terms require us to meet stringent cash maintenance goals, however, in order to enable us to extend through March.”

As previously stated, Covanta has been holding discussions with its banks regarding the need for covenant waivers and access to short term liquidity. The company believes that it has sufficient liquidity to continue immediate operations and is considering various options to supplement its operating cash. The company will continue to discuss these issues with its banks in conjunction with its comprehensive review of strategic options.

Covanta has been downgraded by the debt rating agencies, triggering certain requirements to post in excess of $100 million in performance and other letters of credit. At this time, the company does not have available commitments under its Master Credit Facility to post such letters of credit, and the company is working with the counter-parties for whom such letters of credit would run to modify agreements requiring them to be posted. While no assurances can be given, the company is reasonably confident that it will be able to manage this issue without material adverse impact to the company overall.

Covanta Energy Corporation is an internationally recognized designer, developer, owner and operator of power generation projects and provider of related infrastructure services. The company’s independent power business develops, structures, owns, operates and maintains projects that generate power for sale to utilities and industrial users worldwide. Its waste-to-energy facilities convert municipal solid waste into energy for numerous communities, predominantly in the United States.

The company also offers single-source design/build/operate capabilities for water and wastewater treatment infrastructures. Additional information about Covanta can be obtained via the Internet at, or through the company’s automated information system at 866-COVANTA (268-2682).


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