Environmentally Impaired Assets

Concerning….

ENVIRONMENTALLY IMPAIRED ASSETS

Overview

Federal, state and local laws and regulations relating to environmental protection can impose significant liabilities upon a company without regard to polluter responsibility. A company can find itself party to a number of legal and administrative proceedings involving environmental matters. These include proceedings associated with businesses and facilities currently or previously owned, operated or used by the company and/or its predecessors, and can include claims for personal injuries, property damages, breach of contract, injury to the environment, including natural resource damages, and non-compliance with permits. The current and former operations of a company can also involve management of regulated materials that are subject to various environmental laws and regulations requiring the company to clean up environmentally impaired sites. Some of these sites may have been, or could be, designated Superfund sites by the U.S. Environmental Protection Agency.

Environmental contingencies can sidetrack a potential merger or acquisition. The buyer and seller try to negotiate these difficult issues but because of the statutory continuing liability for the seller and buyer alike (even after disposing of the properties) the seller may be compelled to take a drastic reduction in price or find itself unable to sell at all. To make life more difficult, there are many occasions when a company simply cannot quantify the amount and timing of future expenditures:

  • some sites are in the early stages of investigation, and other sites may be identified in the future;
  • remediation activities vary significantly in duration, scope and cost from site to site depending on the mix of unique site characteristics, applicable technologies and regulatory agencies involved;
  • cleanup requirements are difficult to predict at sites where remedial investigations have not been completed or final decisions have not been made regarding cleanup requirements, technologies or other factors that bear on cleanup costs;
  • environmental laws frequently impose joint and several liability on all potentially responsible parties, and it can be difficult to determine the number and financial condition of other potentially responsible parties and their respective shares of responsibility for cleanup costs;
  • environmental laws and regulations, as well as enforcement policies, are continually changing, and the outcome of court proceedings and discussions with regulatory agencies are inherently uncertain;
  • unanticipated construction problems and weather conditions can hinder the completion of environmental remediation;
  • the inability to implement a planned engineering design or use planned technologies and excavation methods may require revisions to the design of remediation measures, which delay remediation and increase its costs; and
  • the identification of additional areas or volumes of contamination and changes in costs of labor, equipment and technology generate corresponding changes in environmental remediation costs.

The Solution

Our contacts specialize in the acquisition, remediation and redevelopment of environmentally impaired properties while at the same time protecting sellers, future owners and communities from the risks and liabilities associated with environmental impairment. In conjunction with placing capital and generating returns for their investors, these firms provide solutions for sellers and the cities affected by their contaminated sites, typically acquiring assets for cash and indemnifying the seller from environmental liability through the use of insurance policies, their own funds and other customized risk transfer methods. Portfolios can contain both clean and environmentally impaired properties.

These firms take title to the property, and employ their specialized expertise, funds, insurance and relationships with regulatory authorities to protect the seller from future liabilities and to transform communities where urban blight and environmental contamination impede economic growth and community redevelopment.

Plexus’ relationships provide solutions to companies with environmentally impaired assets that are seeking liquidity; desire indemnification from liabilities; or need to remove impediments of environmental liabilities and unwanted assets in the context of pending mergers and acquisitions.

The One Contact M&A Source

You can contact us if you would like to discuss your situation confidentially. References for prior transactions are available.