Loudon County Solid Waste Disposal Commission has resumed contract negotiations with Santek Waste Services.
Negotiations were put on hold June 9 after the board discovered Santek was being acquired by Republic Services. Chris Holmstrom, Santek chief financial officer, was present at the July 14 meeting to answer the board’s questions and give background about the acquisition.
“We were not for sale,” Holmstrom said. “We were not actively trying to sell the company. Republic approached us and solicited an offer to Kenny (Higgins, Santek CEO). Over the last nine months or so, we kind of went through the very detailed due diligence process, and Republic went through that, and on Feb. 18, we signed a definitive agreement with Republic to sell the company. That’s the stock of the company at Santek Waste Services and all the subsidiaries under Santek Waste Services, which Santek Environmental is one of those subsidiaries.”
Holmstrom said he is “95 percent sure” the deal will go through with the Department of Justice, but he does not know when. He suspects it could be within the third or fourth quarter of the year or into the first quarter of next year. The Department of Justice is required to be involved because Republic is such a large company, he said.
“They are going to be held accountable and held to the same standards of the contract just like we are, and we are not going away,” Holmstrom said. “They are retaining all of the field employees. They’re retaining some of the executives, but not all of the executives. Really, they’re out to buy the people, too. They want to maintain the same people, they like the continuity. Good people are hard to find, and we have good people at Santek, so you’re going to see all the same faces I would see.”
Board member Tammi Bivens wondered what would come of the contract with Santek if the deal did go through.
“We have ceased contract negotiations right now,” Bivens said. “If we resume those, what will be the process with Republic? Because I do understand that they have received our amendment thus far and approved that, but what about going forward?”
Holmstrom said Republic cannot speak to the board directly or negotiate with them per Department of Justice regulations as they are competing companies. Whatever Santek agrees to, Republic must honor as well, he said, noting Republic has received copies of the contract amendments and has agreed to all of them.
Board member Bruce Hamilton brought up concerns about excess waste coming from other areas like Atlanta, Ga. Holmstrom presented each board member with a map showing where each Santek and Republic landfill is within a 150-mile radius.
“The current agreement says within 150-mile radius of the landfill you can take waste,” Holmstrom said. “But it’s not practical. … We have 16 locations. Our average cost is 14 cents per mile per ton, and our average round trip is 113 miles. So one-way trip we’re at 56 miles. That’s kind of an average trip. That would equate to 100-mile round trip which is 50 miles from the landfill would cost about $14 a ton … the farther away you go the more and more you have to charge. Even Santek has four landfills between Atlanta and Loudon County landfill. You don’t want to pay a third party hauler to haul it farther away. You want to take it to the closest hole.”
Hamilton and board member John Watkins motioned and seconded, respectively, to resume contract negotiations. The motion passed 6-1. Board member Kelly Littleton-Brewster was the lone opposer.
Littleton-Brewster said she told Loudon County Commission she would take this before them before approving anything.
Board members Larry Jameson and Littleton-Brewster motioned and seconded, respectively, to reduce the radius of accepted waste from 150 miles to 75 miles in the current contract. The motion passed unanimously.