Covanta meets cash management goals

FAIRFIELD, N.J., March 1, 2002 — Covanta Energy Corp. announced that it has satisfied the March 1, 2002 cash management goals necessary to secure the previously announced covenant waivers to its Master Credit Facility.

The company also announced that it is pursuing a restructuring of its balance sheet as part of its previously announced review of all strategic options. While that review continues, Covanta will avail itself of the 30-day grace period provided under the terms of its 9.25% debentures due March 2022, and not to make the interest payment due March 1, 2002, at this time. The extension of the covenant waivers remains subject to ongoing compliance with strict cash management requirements.

“We have initiated discussions regarding reducing, extending or modifying the convertible debt scheduled for repayment later this year,” said Scott G. Mackin, President and Chief Executive Officer. “We have also authorized our financial and legal advisors to begin discussions with holders of our 9.25% debentures immediately.

“During this time, we intend to dedicate our capital resources towards our on-going energy business, our clients, our vendors and our employees. We have sufficient liquidity for these purposes and we are working with our banks to assure that it is available.”

The company has outstanding an aggregate of $100 million 9.25% debentures due 2022 and two series of subordinated convertible debentures aggregating approximately $148.65 million, which are due in June and October 2002.

No assurance can be given that the debt restructuring initiatives will be successful or that the senior secured bank group will afford the company necessary waivers or extensions to accomplish the debt restructuring. Debenture holders should address inquiries to the information agent at Mellon Investor Services at 888/253-1393.

Sale of Select Assets

The company also announced it is pursuing the sale of select foreign energy assets to further enhance its cash position. No announcements will be made unless and until a definitive agreement is reached or until such a transaction closes, however.

Full Year 2001 Recurring Base EBIT To Exceed Previous Guidance

Finally, the company announced that the recurring earnings before interest and taxes for its core energy business (recurring base EBIT) for the year 2001 will exceed its previously announced estimates. The company expects to issue its full year 2001 earnings report later in March.

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 www.covantaenergy.com.

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