the Securities Exchange Act of 1934 (Amendment
No. )
NRC Group
Holdings Corp. (“NRCG”) is making the following supplemental disclosures (this “Proxy Supplement”) to
the definitive proxy statement on Schedule 14A (the “Proxy Statement”) filed with the U.S. Securities and Exchange
Commission by NRCG on September 19, 2019, to provide additional information relating to the Agreement and Plan of Merger, dated
as of June 23, 2019 (the “Merger Agreement”), by and among US Ecology, Inc. (“US Ecology”), US Ecology
Parent, Inc., a wholly-owned subsidiary of US Ecology (“Holdco”), Rooster Merger Sub, Inc., a wholly-owned
subsidiary of Holdco (“Rooster Merger Sub”), ECOL Merger Sub, Inc., a wholly-owned subsidiary of Holdco (“ECOL
Merger Sub”), and NRCG. Subject to the terms and conditions of the Merger Agreement, ECOL Merger Sub will merge with and
into US Ecology, with US Ecology as the surviving entity and continuing as a wholly-owned subsidiary of Holdco (the “ECOL
Merger”) and, simultaneously therewith, Rooster Merger Sub will merge with and into NRCG, with NRCG as the surviving entity
and continuing as a wholly-owned subsidiary of Holdco (the “NRCG Merger,” and together with the ECOL Merger, the “Mergers”).
On October
1, 2019, following the filing of the Proxy Statement, a purported stockholder of NRCG filed a complaint in the United States
District Court for the Southern District of New York, captioned Mehta v. NRC Group Holdings Corp., et al., Case No. 1:19-cv-09091
(the “Complaint”). The Complaint generally alleges that NRCG and its directors violated the federal securities laws
by omitting material information from the Proxy Statement, and seeks, among other things, to enjoin the special meeting of the
common stockholders of NRCG to vote on the Merger Agreement and to enjoin the Mergers.
NRCG and
its directors believe the Complaint’s allegations lack any merit and that the Proxy Statement fully complies with applicable
law. However, solely to avoid the expense and distraction of litigation, NRCG has determined to voluntarily supplement the Proxy
Statement with this Proxy Supplement. The disclosures set forth below should be read in conjunction with the Proxy Statement,
which NRCG urges you to read in its entirety. To the extent that information set forth below differs from information contained
in the Proxy Statement, the information set forth below supersedes such information contained in the Proxy Statement. These supplemental
disclosures to the Proxy Statement shall not be deemed an admission that they are material or required under the federal securities
laws, any applicable state fiduciary law or any other applicable rule, statue, regulation or law. To the contrary, NRCG and its
directors specifically deny that the information in this Proxy Supplement, or any other additional information, is or was required.
Except
as otherwise set forth below, the information set forth in the Proxy Statement remains unchanged, and defined terms used in the
supplemental disclosures below but not otherwise defined in this Proxy Supplement have the meanings ascribed to such terms in
the Proxy Statement.
As previously
disclosed in the Proxy Statement, a special meeting is being held on October 22, 2019, at 9:00 a.m., Central time, at 717 Texas,
Suite 3300, Houston, Texas 77002, for the purpose of considering and voting upon, among other things, the Merger Agreement.
NRCG’s
board of directors recommends that NRCG’s common stockholders vote “FOR” the adoption of the Merger Agreement
and “FOR” the other proposal being considered at the special meeting.
SUPPLEMENT
TO PROXY STATEMENT
1.
|
The
second full paragraph on page 73 of the Proxy Statement under the heading “THE MERGERS—Background of the Mergers”
is hereby revised, supplemented and replaced in its entirety as follows:
|
“On March 21, 2019, NRCG and US Ecology executed
a confidentiality agreement, providing for the confidential treatment of information of NRCG provided to US Ecology in connection
with the parties’ exploration of a potential strategic transaction. On March 25, 2019, NRCG and US Ecology executed a confidentiality
agreement, providing for the confidential treatment of information of US Ecology provided to NRCG in connection with the parties’
exploration of a potential strategic transaction. Following the execution of these confidentiality agreements and through the
signing of the Merger Agreement, each of NRCG and US Ecology and their respective advisors, and, with respect to US Ecology, its
financing sources, conducted due diligence on the other party. The confidentiality agreements entered into by NRCG and US Ecology
each included customary standstill provisions. The confidentiality agreements however, did not prohibit NRCG or US Ecology from
making any private proposal or otherwise asking the board of the other party to waive the standstill. In addition, the standstill
obligations of each of NRCG and US Ecology automatically terminated upon any change in control acquisition announced by the other.”
2.
|
The
second to last full paragraph on page 73 of the Proxy Statement under the heading “THE
MERGERS—Background of the Mergers” is hereby revised, supplemented and replaced
in its entirety as follows:
|
“Over
the course of the next two weeks, as directed by the NRCG Board, Messrs. Baumgardner, Shor and Harman and certain officers of
NRCG continued to engage in discussions with representatives of US Ecology regarding a potential strategic transaction.
In addition,
Messrs. Baumgardner, Shor and Harman approached and interviewed potential financial advisors with expertise both with the industry
in which NRCG operates and transactions of the nature potentially contemplated by NRCG. As a result of that process, Messrs. Baumgardner,
Shor and Harman determined to engage Evercore to serve as financial advisor to NRCG in respect of the potential strategic transaction.”
3.
|
The
last two full paragraphs on page 74 of the Proxy Statement under the heading “THE MERGERS—Background of the Mergers”
are hereby revised, supplemented and replaced in their entirety as follows:
|
“On
April 23, 2019, the NRCG Board held a special telephonic meeting to discuss the US Ecology IOI. Mr. Shor reviewed the
principal terms of the proposal, noting that the proposal reflected a premium to the then current trading price of NRCG Common
Stock of 30.5%. Following discussion of the proposal, Mr. Baumgardner reminded the NRCG Board that he previously served in
numerous senior management roles at US Ecology, including serving as president, chief executive officer, chief operating officer,
chief financial officer and a member of the board of directors, until his departure in 2012. Mr. Baumgardner indicated that
he no longer had any direct or indirect interests, economic or otherwise, in US Ecology and that he had not had any economic interests
in US Ecology for a number of years. The NRCG Board was aware of Mr. Baumgardner’s prior relationship with US Ecology prior
to this meeting as such prior relationship had been discussed with the NRCG Board and disclosed in NRCG’s public filings
since Mr. Baumgardner first joined the NRCG Board in October of 2018. After deliberations, representatives of Jones Day provided
an overview of the fiduciary duties of the NRCG Board and other relevant considerations in evaluating a potential strategic transaction
with US Ecology.
After
deliberations, the NRCG Board determined to continue to explore a potential strategic transaction with US Ecology, including to
(1) engage in confirmatory due diligence of US Ecology, since the consideration proposed by US Ecology was proposed to comprised
solely of shares of ECOL Common Stock and (2) continue to provide information to US Ecology and its representatives, including
access to NRCG management, so that US Ecology could perform its confirmatory due diligence. In addition, in order to facilitate
the evaluation and negotiation of a potential strategic transaction with US Ecology, the NRCG Board unanimously resolved to create
a transaction committee of the NRCG Board (the “Transaction Committee”), to be comprised of Messrs. Baumgardner, Shor
and Harman. Such individuals were appointed because of their knowledge of the operations of NRCG and the industry in which it
operates, as well as their extensive experience in negotiating strategic transactions. The NRCG Board also considered Mr. Baumgardner’s
previous relationship with US Ecology and determined that such prior relationship could potentially benefit the Transaction Committee
in negotiations with US Ecology. The NRCG Board also appointed Mr. Shor as chairman of the Transaction Committee. The NRCG Board
also resolved to formally engage Jones Day as outside legal counsel in connection with the potential transaction. From its formation
on April 23, 2019 through the date on which the Merger Agreement was executed, the Transaction Committee led the evaluation and
negotiation on behalf of NRCG for the proposed transaction with US Ecology.”
4.
|
The
sixth full paragraph on page 76 of the Proxy Statement under the heading “THE MERGERS—Background of the Mergers”
is hereby revised, supplemented and replaced in its entirety as follows:
|
“On
May 30, 2019, the NRCG Board held a regularly scheduled in-person meeting following NRCG’s annual stockholders’
meeting. At that meeting, the NRCG Board reviewed NRCG’s operations and financial performance. Also at that meeting, Mr. Shor
provided an update on the status of due diligence related to the potential strategic transaction with US Ecology, noting that
the parties had conducted in-person meetings in mid-May. Mr. Shor also informed the NRCG Board that the Transaction Committee
expected to receive an updated proposal, as well as a draft merger agreement, from US Ecology the following week. The NRCG Board
also discussed other hypothetical opportunities available to NRCG, including growth through potential acquisitions that NRCG was
not currently pursuing but could decide to pursue at a later time. Later that day, following the NRCG Board meeting, Mr. Shor
called a representative of Houlihan to provide an update.”
5.
|
The
first full paragraph on page 77 of the Proxy Statement under the heading “THE MERGERS—Background of the Mergers”
is hereby revised, supplemented and replaced in its entirety as follows:
|
“On June 2, 2019, in accordance with US Ecology’s
directives, representatives of BofA Merrill Lynch informed representatives of Evercore that US Ecology did not intend to increase
its current proposed per share purchase price which, in light of US Ecology’s due diligence on NRCG’s capital structure, US Ecology
still believed represented an increased enterprise value compared to the US Ecology IOI and that, as such, its proposal was to
acquire all of the outstanding equity of NRCG based on an implied value of $11.05 per share of NRCG Common Stock at a fixed exchange
ratio based on such price per share of NRCG Common Stock and the volume weighted average price of ECOL Common Stock from the date
of the US Ecology IOI until the date on which the definitive merger agreement was signed. The proposed purchase price represented
a premium of approximately 32.0% to the $8.37 closing price of NRCG Common Stock on May 31, 2019, the last trading day prior
to such conversation. Later that evening, US Ecology’s position was confirmed by representatives of Houlihan and Mr. Shor.
In that conversation, Mr. Shor stated that NRCG was not prepared to further engage in a potential strategic transaction at
that valuation. Mr. Shor did not propose or suggest an alternative valuation.”
6.
|
The
second full paragraph on page 77 of the Proxy Statement under the heading “THE MERGERS—Background of the Mergers”
is hereby revised, supplemented and replaced in its entirety as follows:
|
“On June 4, 2019, Mr. Harman received an unsolicited
email communication from a former NRCG executive who had been contacted by a representative of Company A inquiring whether the
JFL Entities would be interested in selling its interests in NRCG. The proposal set forth in the email communication from Company
A was not for all of the outstanding equity interests in NRCG but limited to only the shares of NRCG Common Stock held by the
JFL Entities. At the time of the inquiry from Company A, the JFL Entities were the registered holders of approximately 66% of
the outstanding NRCG Common Stock.”
7.
|
The
third full paragraph on page 77 of the Proxy Statement under the heading “THE MERGERS—Background
of the Mergers” is hereby revised, supplemented and replaced in its entirety as
follows:
|
“Also on June 4, 2019, Mr. Harman and other representatives of the JFL Entities had a telephonic
meeting with a representative of Company A regarding Company A’s proposal. In those discussions, Company A indicated that
it was highly interested in pursuing an acquisition of NRCG and may be willing to acquire not only the shares of NRCG Common Stock
held by the JFL Entities but, alternatively, all of the outstanding equity interests of NRCG. However, there was no discussion
of the valuation of such shares.”
8.
|
The
last two full paragraphs on page 77 of the Proxy Statement under the heading “THE MERGERS—Background of the Mergers”
are hereby revised, supplemented and replaced in their entirety as follows:
|
“On
June 5, 2019, Mr. Shor met with a representative from Houlihan and informed him that a strategic third-party had expressed interest
in acquiring interests in NRCG for cash, but that NRCG would be willing to reengage with US Ecology if US Ecology increased its
proposed valuation to at least $12.00 per share of NRCG Common Stock. A $12.00 per share price valuation represented a premium
of approximately 49.8% to the $8.01 closing price per share on the NYSE American of shares of NRCG Common Stock on that day.
In the morning of June 6, 2019, the Transaction Committee,
together with certain officers of NRCG and representatives of Jones Day, held a telephonic meeting. At that meeting, the Transaction
Committee noted that US Ecology had not been willing to increase its proposed valuation of NRCG and that the Transaction Committee
did not believe US Ecology’s proposed valuation of $11.05 per share of NRCG Common Stock was adequate. Mr. Shor also informed
the Transaction Committee that he had previously suggested to representatives from Houlihan that the proposed valuation needed
to be at least $12.00 per share of NRCG Common Stock. Mr. Harman informed the Transaction Committee that the JFL Entities were
willing to delay making any independent decision on a transaction with Company A until after the Transaction Committee had fully
explored a potential strategic transaction with US Ecology. Mr. Harman also informed the Transaction Committee of the unsolicited
proposal that the JFL Entities, in their capacity as a stockholder of NRCG, had received from Company A. After deliberation, the
Transaction Committee resolved to inform US Ecology of the unsolicited proposal from Company A and reaffirm that the Transaction
Committee would be willing to continue to explore a potential strategic transaction exclusively with US Ecology so long as US
Ecology increased its proposed valuation to at least $12.00 per share of NRCG Common Stock.”
9.
|
The
third full paragraph on page 107 of the Proxy Statement under the heading “THE MERGERS—Opinion of NRCG’s Financial
Advisor” is hereby revised, supplemented and replaced in its entirety as follows:
|
“Perpetuity
Growth Rate Methodology. Using the perpetuity growth rate methodology, Evercore calculated terminal values
for NRCG by applying perpetuity growth rates of 2.0% to 3.0%, which range was selected based on Evercore’s professional judgment
and experience, to a terminal year estimate of the unlevered, after-tax free cash flows that NRCG was forecasted to generate based
on the NRCG forecasts. The cash flows and terminal values in each case were then discounted to present value as of March 31,
2019 using discount rates ranging from 9.0% to 10.0%, which were based on an estimate of NRCG’s weighted average cost of capital
and the mid-year cash flow discounting convention. In calculating implied enterprise values, Evercore included the present value
of tax savings from NRCG’s estimated usage of net operating losses. Based on this range of implied enterprise values, NRCG’s
estimated net debt (calculated as total debt less cash and cash equivalents) as of March 31, 2019, and the number of fully diluted
shares of NRCG Common Stock (representing 51.872 million shares, based upon the midpoint of the implied equity value range and
assuming conversion of each share of NRCG Series A Preferred Stock into NRCG Common Stock in accordance with their terms), in
each case as provided by NRCG’s management, this analysis indicated a range of implied equity values per share of NRCG Common
Stock of $12.84 to $16.91.”
10.
|
The
fourth full paragraph on page 107 of the Proxy Statement under the heading “THE MERGERS—Opinion of NRCG’s Financial
Advisor” is hereby revised, supplemented and replaced in its entirety as follows:
|
“EBITDA Multiple
Methodology. Using the EBITDA multiple methodology, Evercore calculated terminal values for NRCG by applying terminal
multiples of 8.00x to 10.00x, which range was selected based on Evercore’s professional judgment and experience, to NRCG’s Adjusted
EBITDA in fiscal year 2023 based on the NRCG forecasts. The cash flows and terminal values in each case were then discounted to
present value as of March 31, 2019 using discount rates ranging from 9.0% to 10.0%, which were based on an estimate of NRCG’s
weighted average cost of capital, and the mid-year cash flow discounting convention. In calculating implied enterprise values,
Evercore included the present value of tax savings from NRCG’s estimated usage of net operating losses. Based on this range
of implied enterprise values, NRCG’s estimated net debt (calculated as total debt less cash and cash equivalents) as of
March 31, 2019, and the number of fully diluted shares of NRCG Common Stock (representing 54.376 million shares, based upon
the midpoint of the implied equity value range and assuming conversion of each share of NRCG Series A Preferred Stock into NRCG
Common Stock in accordance with their terms), in each case as provided by NRCG’s management, this analysis indicated a range
of implied equity values per share of NRCG Common Stock of $15.35 to $19.83.”
11.
|
The
second full paragraph on page 108 of the Proxy Statement under the heading “THE MERGERS—Opinion of NRCG’s Financial
Advisor” is hereby revised, supplemented and replaced in its entirety as follows:
|
“Perpetuity
Growth Rate Methodology. Using the perpetuity growth rate methodology, Evercore calculated terminal values for US Ecology
by applying perpetuity growth rates of 2.0% to 3.0%, which range was selected based on Evercore’s professional judgment
and experience, to a terminal year estimate of the unlevered, after-tax free cash flows that US Ecology was forecasted to generate
based on the US Ecology forecasts. The cash flows and terminal values in each case were then discounted to present value as of
March 31, 2019 using discount rates ranging from 8.0% to 9.0%, which were based on an estimate of US Ecology’s weighted
average cost of capital and the mid-year cash flow discounting convention. Based on this range of implied enterprise values,
US Ecology’s estimated net debt (calculated as total debt less cash and cash equivalents) as of March 31, 2019, and
the number of fully diluted shares of ECOL Common Stock (representing 22.259 million shares, based upon the midpoint of the implied
equity value range), in each case as provided by US Ecology’s management and approved for Evercore’s use by NRCG,
this analysis indicated a range of implied equity values per share of ECOL Common Stock of $53.63 to $78.00.”
12.
|
The
third full paragraph on page 108 of the Proxy Statement under the heading “THE MERGERS—Opinion of NRCG’s Financial
Advisor” is hereby revised, supplemented and replaced in its entirety as follows:
|
“EBITDA Multiple
Methodology. Using the EBITDA multiple methodology, Evercore calculated terminal values for US Ecology by applying
terminal multiples of 9.0x to 12.0x, which range was selected based on Evercore’s professional judgment and experience, to US
Ecology’s estimated Adjusted EBITDA in fiscal year 2023 based on the US Ecology forecasts. The cash flows and terminal values
in each case were then discounted to present value as of March 31, 2019 using discount rates ranging from 8.0% to 9.0%, which
were based on an estimate of US Ecology’s weighted average cost of capital and the mid-year cash flow discounting convention. Based
on this range of implied enterprise values, US Ecology’s estimated net debt (calculated as total debt less cash and cash
equivalents) as of March 31, 2019, and the number of fully diluted shares of ECOL Common Stock (representing 22.307 million shares,
based upon the midpoint of the implied equity value range), in each case as provided by US Ecology’s management and approved
for Evercore’s use by NRCG, this analysis indicated a range of implied equity values per share of ECOL Common Stock of $70.22
to $97.17.”
13.
|
The
bulleted list on page 109 of the Proxy Statement under the heading “THE MERGERS—Opinion
of NRCG’s Financial Advisor” is hereby revised, supplemented and replaced
in its entirety as follows:
|
Selected Company
|
|
2019E Adjusted EBITDA
|
|
Price/2019E EPS1
|
|
Price/2019E Tax Adjusted EPS1
|
Advanced Disposal Services, Inc.
|
|
10.8x
|
|
NM
|
|
NM
|
Clean Harbors, Inc.
|
|
10.1x
|
|
38.8x
|
|
37.5x
|
Covanta Holding Corporation
|
|
10.7x
|
|
NM
|
|
NM
|
Heritage Crystal Clean Inc.
|
|
11.7x
|
|
27.0x
|
|
28.5x
|
NRC Group Holdings Corp.
|
|
7.3x
|
|
17.8x
|
|
23.8x
|
Republic Services, Inc.
|
|
12.3x
|
|
26.8x
|
|
27.7x
|
Stericycle, Inc.
|
|
10.7x
|
|
14.2x
|
|
15.6x
|
US Ecology, Inc.
|
|
11.7x
|
|
25.8x
|
|
25.8x
|
Waste Connections Inc.
|
|
16.9x
|
|
34.5x
|
|
41.6x
|
Waste Management, Inc.2
|
|
13.6x
|
|
27.0x
|
|
28.3x
|
|
1.
|
EPS
based on fully diluted shares outstanding and normalized Net Income, calculated by applying 27.0% tax rate to analyst consensus
pre-tax income estimates.
|
|
2.
|
Multiples
are not pro forma for Waste Management, Inc.’s acquisition of Advanced Disposal Services, Inc. announced on April 15, 2019
as consolidated estimates were not yet provided by research analysts.
|
14.
|
The
second full paragraph on page 111 of the Proxy Statement under the heading “THE
MERGERS—Opinion of NRCG’s Financial Advisor” is hereby revised, supplemented
and replaced in its entirety as follows:
|
“Evercore reviewed financial information related to
the following selected transactions involving publicly traded target companies in the environmental and facilities services and
sanitation services industries announced since 2010 (the “selected transactions”). The selected transactions reviewed
by Evercore, the month and year each was announced and the LTM EBITDA (as defined below) for each of the selected transactions,
were as follows for the environmental and facilities services industry:”
15.
|
The third full paragraph on page 111 of the Proxy Statement under the heading “THE MERGERS—Opinion of NRCG’s Financial Advisor” is hereby revised, supplemented and replaced in its entirety as follows:
|
“The selected transactions reviewed by Evercore, the
month and year each was announced and the LTM EBITDA (as defined below) for each of the selected transactions, were as follows
for the sanitation services industry:”
16.
|
The
two tables on page 111 of the Proxy Statement under the heading “THE MERGERS—Opinion of NRCG’s Financial Advisor”
are hereby revised, supplemented and replaced in their entirety as follows:
|
Month and Year Announced
|
|
Acquirer
|
|
Target
|
|
LTM EBITDA—Environmental and Facilities Services
|
May 2019
|
|
Harsco Corporation
|
|
Clean Earth
|
|
14.4x
|
September 2018
|
|
Univar Inc.
|
|
Nexeo Solutions Inc.
|
|
9.7x
|
June 2018
|
|
Hennessy Capital Acq Corp III
|
|
NRC Group Holdings LLC
|
|
8.6x
|
March 2017
|
|
New Mountain Partners IV LP
|
|
TRC Cos Inc.
|
|
12.8x
|
November 2013
|
|
AEA Investors LP
|
|
Siemens Water Tech Corp
|
|
19.7x
|
August 2013
|
|
NGL Energy Partners LP
|
|
Oilfield Water Lines LP
|
|
10.7x
|
October 2012
|
|
Clean Harbors
|
|
Safety-Kleen, Inc.
|
|
6.6x
|
March 2012
|
|
Heckmann Corporation
|
|
Thermo Fluids, Inc.
|
|
8.1x
|
September 2010
|
|
US Ecology, Inc.
|
|
Seaway TLC Inc.
|
|
NA
|
Month and
Year Announced
|
|
Acquirer
|
|
Target
|
|
LTM
EBITDA—Sanitation Services
|
April 2019
|
|
Waste Management Inc.
|
|
Advanced Disposal Services Inc.
|
|
11.5x
|
December 2018
|
|
Waste Connections Inc.
|
|
American Disposal Services LLC
|
|
NA
|
October 2018
|
|
GFL Waste & Recycling Solutions Corp
|
|
Waste Industries USA LLC
|
|
NA
|
January 2016
|
|
Waste Connections Inc.
|
|
Progressive Waste Solutions
|
|
7.1x
|
October 2014
|
|
Waste Management Inc.
|
|
Deffenbaugh Disposal Inc.
|
|
NA
|
February 2014
|
|
JPX Global Inc.
|
|
Scorpex Inc. (Certain Assets)
|
|
NA
|
April 2013
|
|
EQT Infrastructure II GP BV
|
|
Synagro Technologies Inc.
|
|
NA
|
January 2013
|
|
Energy Capital Partners II LLC
|
|
EnergySolutions Inc.
|
|
8.1x
|
July 2012
|
|
Advanced Disposal Services Inc.
|
|
Veolia ES Solid Waste Inc
|
|
NA
|
December 2011
|
|
Macquarie Infrastructure Partners
|
|
WCA Waste Corp
|
|
8.8x
|
July 2011
|
|
Waste Management Inc.
|
|
Oakleaf Global Holdings Inc
|
|
NA
|
April 2011
|
|
Waste Connections Inc.
|
|
Hudson Valley Waste Hldg Inc.
|
|
NA
|
January 2011
|
|
CE Holdings II LLC
|
|
Fairfield County Recycling Inc
|
|
9.6x
|
September 2010
|
|
Stericycle Inc.
|
|
Healthcare Waste Solutions Inc
|
|
NA
|
|
17.
|
The first table
on page 119 of the Proxy Statement under the heading “THE MERGERS—Certain Financial Forecasts Prepared by
US Ecology Management” is hereby revised, supplemented and replaced in its entirety as follows:
|
Fiscal Year Ending December 31,
|
|
2019 Q2-Q4
|
|
|
2020E
|
|
|
2021E
|
|
|
2022E
|
|
|
2023E
|
|
Stock-based compensation expense
|
|
$
|
(3
|
)
|
|
$
|
(5
|
)
|
|
$
|
(6
|
)
|
|
$
|
(6
|
)
|
|
$
|
(6
|
)
|
Cash tax expense
|
|
$
|
(15
|
)
|
|
$
|
(28
|
)
|
|
$
|
(30
|
)
|
|
$
|
(34
|
)
|
|
$
|
(38
|
)
|
Closing / post-closing payments
|
|
$
|
(1
|
)
|
|
$
|
(3
|
)
|
|
$
|
(10
|
)
|
|
$
|
(6
|
)
|
|
$
|
(6
|
)
|
Change in net working capital
|
|
$
|
(11
|
)
|
|
$
|
3
|
|
|
$
|
(9
|
)
|
|
$
|
(10
|
)
|
|
$
|
(10
|
)
|
Capital expenditures
|
|
$
|
(38
|
)
|
|
$
|
(47
|
)
|
|
$
|
(58
|
)
|
|
$
|
(42
|
)
|
|
$
|
(44
|
)
|
Unlevered Free Cash Flow(2)
|
|
$
|
14
|
|
|
$
|
71
|
|
|
$
|
50
|
|
|
$
|
82
|
|
|
$
|
94
|
|
Note: Dollars in millions.
|
(2)
|
Fiscal
year 2019 2H Unlevered Free Cash Flow represents unlevered free cash flows for the six months ended December 31, 2019. For
this purpose, Unlevered Free Cash Flow is defined as Adjusted EBITDA less stock-based compensation expense, cash tax expense,
closing / post-closing payments, change in net working capital and capital expenditures.
|
|
18.
|
The
table on page 120 of the Proxy Statement under the heading “THE MERGERS—Certain Financial Forecasts Prepared by US
Ecology Management” is hereby revised, supplemented and replaced in its entirety as follows:
|
Fiscal Year Ending December 31,
|
|
2019 Q2-Q4
|
|
|
2020E
|
|
|
2021E
|
|
|
2022E
|
|
|
2023E
|
|
Cash tax expense
|
|
$
|
(12
|
)
|
|
$
|
(21
|
)
|
|
$
|
(22
|
)
|
|
$
|
(25
|
)
|
|
$
|
(27
|
)
|
Closing / post-closing payments
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
Contingent payments
|
|
$
|
(4
|
)
|
|
$
|
(2
|
)
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Change in net working capital
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
(4
|
)
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
Capital expenditures
|
|
$
|
(31
|
)
|
|
$
|
(24
|
)
|
|
$
|
(37
|
)
|
|
$
|
(25
|
)
|
|
$
|
(33
|
)
|
Unlevered Free Cash Flow(2)
|
|
$
|
18
|
|
|
$
|
64
|
|
|
$
|
64
|
|
|
$
|
86
|
|
|
$
|
81
|
|
Note: Dollars in millions.
|
(2)
|
Fiscal
year 2019 2H Unlevered Free Cash Flow represents unlevered free cash flows for the six months ended December 31, 2019. For
this purpose, Unlevered Free Cash Flow is defined as Adjusted EBITDA (as defined in footnote (1) under the table titled “US
Ecology-Prepared NRCG Unaudited Financial Projections” above) less cash tax expense, closing / post-closing payments, contingent
payments, change in net working capital and capital expenditures.
|
|
19.
|
The
two tables on page 123 of the Proxy Statement under the heading “THE MERGERS—Certain Financial Forecasts Prepared
by NRCG Management” are hereby revised, supplemented and replaced in their entirety as follows:
|
Fiscal Year Ending December 31,
|
|
|
2019 Q2-Q4
|
|
|
|
2020E
|
|
|
|
2021E
|
|
|
|
2022E
|
|
|
|
2023E
|
|
Taxes
|
|
$
|
(20
|
)
|
|
$
|
(30
|
)
|
|
$
|
(34
|
)
|
|
$
|
(36
|
)
|
|
$
|
(38
|
)
|
Change in Net Working Capital
|
|
$
|
(15
|
)
|
|
$
|
(8
|
)
|
|
$
|
(4
|
)
|
|
$
|
(2
|
)
|
|
$
|
(1
|
)
|
Capital Expenditures
|
|
$
|
(40
|
)
|
|
$
|
(20
|
)
|
|
$
|
(35
|
)
|
|
$
|
(21
|
)
|
|
$
|
(28
|
)
|
Unlevered Free Cash
Flow(2)
|
|
$
|
18
|
|
|
$
|
80
|
|
|
$
|
78
|
|
|
$
|
102
|
|
|
$
|
101
|
|
Note:
Dollars in millions.
|
(2)
|
For
this purpose, Unlevered Free Cash Flow is defined as Adjusted EBITDA (as defined in footnote (1) under the table titled “NRCG
Unaudited Financial Projections” above) less cash taxes, change in net working capital and maintenance and growth capital
expenditures.
|
Fiscal Year Ending December 31,
|
|
2019 Q2-Q4
|
|
|
2020E
|
|
|
2021E
|
|
|
2022E
|
|
|
2023E
|
|
Taxes
|
|
$
|
(20
|
)
|
|
$
|
(28
|
)
|
|
$
|
(31
|
)
|
|
$
|
(37
|
)
|
|
$
|
(42
|
)
|
Change in Net Working Capital
|
|
$
|
(4
|
)
|
|
$
|
(5
|
)
|
|
$
|
(13
|
)
|
|
$
|
(22
|
)
|
|
$
|
(16
|
)
|
Maintenance Capital Expenditures
|
|
$
|
(34
|
)
|
|
$
|
(55
|
)
|
|
$
|
(47
|
)
|
|
$
|
(33
|
)
|
|
$
|
(35
|
)
|
Growth Capital Expenditures
|
|
$
|
(11
|
)
|
|
$
|
(15
|
)
|
|
$
|
(14
|
)
|
|
$
|
(15
|
)
|
|
$
|
(14
|
)
|
Unlevered Free Cash Flow(1)
|
|
$
|
41
|
|
|
$
|
69
|
|
|
$
|
86
|
|
|
$
|
120
|
|
|
$
|
147
|
|
Note: Dollars in millions.
|
(1)
|
For
this purpose, Unlevered Free Cash Flow is defined as Adjusted EBITDA (as defined in footnote (1) under the table titled “US
Ecology Unaudited Financial Projections” above) less cash taxes, change in net working capital and maintenance and growth
capital expenditures.
|
***
FORWARD-LOOKING
STATEMENTS
Statements
in this communication that are not historical facts are forward-looking statements that reflect US Ecology’s and NRCG’s
respective management’s current expectations, assumptions and estimates of future performance and economic conditions. These
forward-looking statements are made in reliance on the safe harbor provisions of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These forward-looking statements relate to, among other things, future events
or the future performance or operations of US Ecology and NRCG. All statements other than historical facts may be forward-looking
statements; words such as “anticipate,” “believe,” “could,” “design,” “estimate,”
“expect,” “forecast,” “goal,” “guidance,” “imply,” “intend,”
“may”, “objective,” “opportunity,” “outlook,” “plan,” “position,”
“potential,” “predict,” “project,” “prospective,” “pursue,” “seek,”
“should,” “strategy,” “target,” “would,” “will” or other similar expressions
that convey the uncertainty of future events or outcomes are used to identify forward-looking statements. Such forward-looking
statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are
beyond the control of US Ecology or NRCG. Factors that could cause US Ecology’s or NRCG’s actual results to differ
materially from those implied in the forward-looking statements include: (1) the risk that the conditions to the closing
of the transaction are not satisfied, including the risk that required approvals for the transaction from governmental authorities
or the stockholders of US Ecology or NRCG are not obtained; (2) the occurrence of any event, change or other circumstances
that either could give rise to the right of one or both of US Ecology or NRCG to terminate the Merger Agreement; (3) litigation
relating to the transaction; (4) uncertainties as to the timing of the consummation of the transaction and the ability of
each party to consummate the transaction; (5) risks related to disruption of management time from ongoing business operations
due to the proposed transaction; (6) unexpected costs, charges or expenses resulting from the transaction; (7) the ability
of US Ecology and NRCG to retain and hire key personnel; (8) competitive responses to the proposed transaction and the impact
of competitive services; (9) certain restrictions during the pendency of the Mergers that may impact US Ecology’s or
NRCG’s ability to pursue certain business opportunities or strategic transaction; (10) the terms and availability of
the indebtedness planned to be incurred in connection with the transaction to refinance NRCG’s existing indebtedness; (11) potential
adverse changes to business relationships resulting from the announcement or completion of the transaction; (12) the combined
companies’ ability to achieve the growth prospects and synergies expected from the transaction, as well as delays, challenges
and expenses associated with integrating the combined companies’ existing businesses; and (13) legislative, regulatory
and economic developments, including changing business conditions in the industries in which US Ecology and NRCG operate. These
risks, as well as other risks associated with the proposed transaction, are more fully described in the joint proxy statement/prospectus
that was filed with the Securities and Exchange Commission (“SEC”) by NRCG on September 19, 2019 in connection with
the proposed transaction. Investors and potential investors are urged not to place undue reliance on forward-looking statements
in this communication, which speak only as of this date. Neither US Ecology nor NRCG undertakes any obligation to revise or update
publicly any forward-looking statement to reflect future events or circumstances. Nothing contained herein constitutes or will
be deemed to constitute a forecast, projection or estimate of the future financial performance of US Ecology, NRCG, Holdco or
the combined company, whether following the implementation of the proposed transaction or otherwise.
In
addition, actual results are subject to other risks and uncertainties that relate more broadly to US Ecology’s and NRCG’s
overall business, including those more fully described in US Ecology’s and NRCG’s filings with the SEC.
NO
OFFER OR SOLICITATION
This
communication relates to a proposed business combination involving US Ecology and NRCG. The information in this communication
is for informational purposes only and is neither an offer to purchase, nor a solicitation of an offer to sell, subscribe for
or buy any securities or the solicitation of any vote in any jurisdiction pursuant to the proposed transactions or otherwise,
nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer
of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933,
as amended.
ADDITIONAL
INFORMATION AND WHERE TO FIND IT
In
connection with the proposed transaction, Holdco has filed with the SEC a Registration Statement on Form S-4 that includes the
Joint Proxy Statement of US Ecology and NRCG and a Prospectus of Holdco, as well as other relevant documents regarding the proposed
transaction. INVESTORS AND SECURITY HOLDERS ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT, INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS,
REGARDING THE MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS,
BECAUSE THESE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION. A definitive Joint Proxy Statement/Prospectus
has been mailed to stockholders of US Ecology and NRCG. A free copy of the Joint Proxy Statement/Prospectus, as well as other
filings containing information about US Ecology and NRCG, may be obtained at the SEC’s website, www.sec.gov. You may obtain
these documents, free of charge, by accessing US Ecology’s website at https://investors.usecology.com or by accessing NRCG’s
website at ir.nrcg.com.
PARTICIPANTS
IN THE SOLICITATION RELATING TO THE MERGERS
US
Ecology, Holdco and NRCG and their respective directors and executive officers and other members of management and employees may
be deemed to be participants in the solicitation of proxies from US Ecology stockholders and NRCG stockholders in respect of the
proposed transaction. Information regarding US Ecology’s directors and executive officers is contained in US Ecology’s
Annual Report on Form 10-K for the year ended December 31, 2018 and its Proxy Statement on Schedule 14A, dated April 11, 2019,
which are filed with the SEC. Information regarding NRCG’s directors and executive officers is contained in NRCG’s
Annual Report on Form 10-K for the year ended December 31, 2018 and its Proxy Statement on Schedule 14A, dated April 17, 2019,
which are filed with the SEC. Additional information regarding the interests of those participants and other persons who may be
deemed participants in the transaction is included in the registration statement and joint proxy statement/prospectus and other
relevant materials filed with the SEC. A free copy of these documents may be obtained as described in the preceding paragraph.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
|
NRC
GROUP HOLDING CORP.
|
|
|
Date:
October 16, 2019
|
By:
|
/s/
Joseph Peterson
|
|
|
Name:
Joseph Peterson
|
|
|
Title:
Chief Financial Officer
|
9