Incineration firm acts to reschedule debts, seeks buyer

May 20, 1994|By Kim Clark | Kim Clark,Sun Staff Writer

Medical Waste Associates Inc., the owner of the region's biggest infectious-waste incinerator, has defaulted on its bonds and is attempting to renegotiate its debts, the company and its creditors confirmed yesterday.

In addition, the owners -- who are some of Baltimore's business and political elite -- are attempting to sell the Hawkins Point plant.

Neil J. Ruther, one of Medical Waste's founding partners and general counsel, said the company fell behind in its payments on million of bonds in March. And Medical Waste is attempting to renegotiate about $5 million of debts to construction companies and other trade creditors, he said.

The company is also negotiating with several potential buyers, he said. One potential bidder: Timonium-based Grotech Partners Inc., a venture capital firm.

Mr. Ruther said he hopes to resolve the company's financial difficulties by this summer.

Medical Waste was founded in response to a seeming medical-waste disposal crisis in 1988 by a group that included William Boucher III, longtime head of the Greater Baltimore Committee; Thomas D. McKewen, former head of the Maryland Environmental Service; the late Harry J. McGuirk, former state senator and South Baltimore political power; and Mr. Ruther.

Investors who joined later include Raymond B. Haysbert Sr., chairman of Parks Sausage Co.; Otis Warren Jr., a prominent hTC Baltimore developer; Theo C. Rodgers, also a developer; and Alvin Sherman, former owner of Florida-based Development Corp. of America.

Medical Waste has been struggling financially since the original construction company pulled out of the job without finishing the plant in the fall of 1991.

It was pushed into a cash crisis by the pipe-breaking freezes and traffic-stopping ice storms of this winter, Mr. Ruther said.

The unprecedented cold weather destroyed equipment and stopped company trucks from picking up medical waste at hospitals. As a result, some of the hospitals pulled out of their agreements to pay Medical Waste $307 a ton for burning their waste.

"The storms took the plant to its knees and Johns Hopkins Hospital pulled out. That's what pushed us over the edge," Mr. Ruther said.

Currently, Mr. Ruther said, only one of the two incinerator units is operating. And the plant is burning less than 50 tons of waste a day -- a third of its capacity.

In a 1992 study, City Auditor Allan L. Reynolds found that the plant would be able to pay its operating expenses only if it burned at least 89 tons a day. It would need even more waste to pay back investors and make a profit.

A spokesman for Medical Waste's largest bondholder and creditor, Dreyfus Trust Co. of New York, would only confirm that the two sides were negotiating a repayment schedule.

But Thomas C. Valkenet, an attorney who represents a trucking company and several other suppliers who are pursuing Medical Waste in court for payment, said the company's financial condition has gotten worse in recent months, and some creditors have been told the company is hoping to settle some large trade debts for at least a 30 percent discount.

He said he's counted about $1.3 million worth of judgments and liens against Medical Waste filed by creditors in Baltimore City's court. And he plans to add another claim for more than $100,000 in a new unpaid bill in the coming weeks.

Michael Plank, director of housekeeping for the Johns Hopkins Hospital, said yesterday that Hopkins pulled out of the waste-disposal agreement in February, after the snowstorms capped a series of failures by Medical Waste.

Johns Hopkins is now burning about 6 tons a day of infectious waste at its own incinerator, and is sending another 11 tons a day of noninfectious waste to a landfill, he said.

He said he will give Medical Waste another chance to win the business of the region's largest hospital this summer, but only if the company proves it can consistently pick up and dispose of the waste.

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