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Laidlaw Environmental Services, Inc. : Safety-Kleen Corporation, Inc. 9.25% Senior Subordinated Notes due 2008 Summary: On April 17, 2006, the Court entered the Mandate and Judgment from the U.S. Court of Appeals remanding the case for further proceedings. On April 17, 2006, a Stipulation and Agreement of Settlement was filed. A settlement fund in the amount of $1.5 million was established to settle claims with defendant TD Securities. On July 14, 2006, the Court entered the Order and Final Judgment approving the settlement.
On June 23, 2005, the Court entered the Order and Final Judgment and Stipulation and Agreement of Settlement with respect to the D&O Defendants. Judgment was entered on June 24, 2005 against the defendants, and an Amended Judgment was entered on July 5, 2005. On July 21, 2005, the plaintiff American High Income Trust filed a Notice of Appeal. The case is pending in the Court of Appeals.
By the Notice of Proposed Partial Settlement dated May 2, 2005, a settlement fund in the amount of $14,410,000 has been established. The Partial Settlement with the Individual Defendants was reached on April 21, 2005, during the trial, and after certain judgments were entered as a matter of law in favor of certain of the Individual Defendants. On April 21, 2005, the Lead Plaintiffs signed a Stipulation and Agreement of Settlement with the Individual Defendants.
In a press release dated March 31, 2005, PricewaterhouseCoopers has agreed to pay $28.8 million to two plaintiffs, America High Income Trust and State Street Research Income Trust, according to court documents. The two companies were major bond holders of Safety-Kleen and claimed that PricewaterhouseCoopers turned a blind eye toward questionable accounting within the company. The remaining $19.2 million of the settlement will be paid to participants in a class-action lawsuit against the accounting firm, the court documents said. Earlier reports of a settlement with PricewaterhouseCoopers only listed the class-action portion of the payment. PricewaterhouseCoopers did not admit any wrongdoing in the settlement. The settlement, which was filed March 15, puts an end to all claims against PricewaterhouseCoopers for its role in accounting problems that brought down its client, Safety-Kleen. Two other lawsuits against Safety-Kleen and its accounting firm were settled for $30 million in February 2004.
On March 21, 2005, a complaint was filed against Laidlaw Environmental Services, Inc. in relation to a current class action entitled In re Safety- Kleen Bondholders Litigation. The Complaint alleges that on March 6, 2000, Safety-Kleen announced that it had uncovered material "accounting irregularities" in its financial reports, leading it to place its three top executives on leave while a Special Committee appointed by Safety-Kleen's Board of Directors conducted an internal investigation. The value of the Bonds plunged dramatically in response to this announcement. At the conclusion of the investigation, the Company issued restated financial statements for the years ended August 31, 1997, 1998 and 1999 which collectively reduced the company's net income by more than $530 million. The class action has been filed on behalf of OCM High Yield Trust, OCM High Yield Limited Partnership and OCM High Yield Fund II, L.P., as well all other funds and accounts which are managed by Oaktree Capital Management, LLC. These funds purchased or acquired 91/4 % senior notes due in 2008 issued by Laidlaw Environmental Services, Inc., the predecessor to Safety-Kleen Corp., in the initial offering and/or on the secondary market from May 1, 1998 through March 6, 2000.
By the Notices of Proposed Partial Settlement of Class Action dated March 21, 2005, the trial of the Action commenced with the selection of a jury on March 1, 2005. The Partial Settlement with defendant PwC was reached on March 8, 2005, two days before opening statements in the trial were to begin. On March 9, 2005, the Lead Plaintiffs signed a Stipulation and Agreement of Settlement with PwC.
In a settlement filed March 12, 2005, in federal court, PricewaterhouseCoopers agreed to pay $19.2 million to settle its part of a class-action lawsuit filed by former Safety-Kleen officials and advisers. Testimony in the lawsuit against nine other defendants is continuing in federal court in Columbia. In the court order, PricewaterhouseCoopers denied wrongdoing but said it would settle "to eliminate the burden and expense" and risk of continuing as a defendant in the $124 million lawsuit. A hearing on the proposed settlement is set for May 30. The firm served as external accountant between 1997 and 1999 for Safety-Kleen and its predecessor, Laidlaw Environmental Services Inc. -- a time when the company overstated profits by $530 million. PricewaterhouseCoopers left as Safety-Kleen's accountant in August 2000, two months after Safety-Kleen filed for bankruptcy with $1.5 billion in debt.
The original complaint alleges that, as admitted by Safety-Kleen on and after March 6, 2000, Safety-Kleen issued materially false and misleading financial statements throughout the Class Period. These materially false and misleading financial statements, as the complaint alleges, artificially inflated the price of the 2008 Bonds until, as the truth about Safety-Kleen began to emerge in early March 2000, the value of 2008 Bonds suddenly and dramatically collapsed. On March 6, 2000, Safety-Kleen shocked investors by announcing that it would investigate accounting irregularities in Safety-Kleen's financial statements issued since late 1997, and that Safety-Kleen's most senior officers, the Individual Defendants here, would be placed on administrative leave pending the investigation. On March 9, 2000, PWC withdrew its previously-issued reports on Safety-Kleen's financial statements for the fiscal years ended August 31, 1997, 1998, and 1999. The Securities and Exchange Commission ("SEC") has commenced aformal investigation of Safety-Kleen while Safety-Kleen itself is conducting a forensic audit to determine what its true financial and operational position is. The resignations of the Individual Defendants were announced on May 12, 2000. On or about May 30, 2000, Safety- Kleen defaulted on its debt payments, and on or about June 9, 2000, Safety-Kleen and Safety- Kleen Services, Inc. filed for bankruptcy under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. As a result of these events, the 2008 Bonds' trading price plunged from 91% of par value in early March 2000 to 12% of par value by mid-March 2000 to 6.75% of par value on June 9, 2000 - a decline of over 92%.
INDUSTRY CLASSIFICATION:
SIC Code: 4955
Sector: Services
Industry: Waste Management Services
| COMPANY/ISSUER NAME: | Laidlaw Environmental Services, Inc. |
| COMPANY/ISSUER TICKER: | SK |
| COMPANY WEBSITE: | http://www.safety-kleen.com |
| FIRST IDENTIFIED COMPLAINT IN THE DATABASE | |||||||||||||||||
| Muzinich & Co. Inc., et al. v. Safety-Kleen Corporation, Inc., et al. | |||||||||||||||||
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| DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT | |||
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| REFERENCE COMPLAINT | |||||||||||||||||
| In Re: Safety-Kleen Corporation, Inc. Bondholders Litigation | |||||||||||||||||
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| OTHER DOCUMENTS | |||
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