The Internal Revenue Service has opened an audit of $10 million of variable-rate demand solid-waste disposal revenue bonds issued by the Gloucester County, Va., Industrial Development Authority.
The borrower, Waste Management Inc., disclosed the audit in a material event notice it filed yesterday with the nationally recognized municipal securities information repositories.
The authority, now known as the Gloucester County Economic Development Authority, issued the bonds in 2003. The proceeds were loaned to Waste Management Disposal Services of Virginia, a wholly owned subsidiary of Waste ManagementInc., which then used them to finance the acquisition, construction, installation, and equipping of solid-waste disposal facilities in the county, according to bond documents.
Banc of America Securities LLC was underwriter and remarketing agent on the deal and Troutman Sanders LLP was bond counsel. Deutsche Bank Trust Company Americas was trustee.
In its notice, Waste Management said: "The company has no reason to believe that the examination is anything other than a random examination of the type of transaction that the bonds represent."
Several other conduit issues sold for Waste Management or its subsidiaries also are under IRS investigation. The company disclosed in February that $20 million of variable-rate demand bonds issued by King George County, Va., Industrial Development Authority were under audit by the IRS.
In September, the company disclosed that the IRS was conducting an audit of the Northeast Maryland Waste Disposal Authority's $41.1 million of Series 1998 resource recovery revenue bonds.
The bond proceeds from both issues were used to finance the acquisition, construction, installation, and equipping of solid-waste disposal facilities for several projects.
In the material event notices for those bonds, Waste Management said it believed the audit was a random examination of that particular bond type.
Similar language was found in material event notices disclosing audits last spring of $15 million of exempt facilities bonds issued in 2001 by the Arkansas Development Finance Authority, and $10 million of solid-waste disposal revenue bonds issued in 2003 by the Nevada Department of Business and Industry. In addition, the IRS is auditing two issues of solid-waste disposal bonds sold by Gilliam County, Ore. - $25 million in 2002 and $15 million in 2003.
