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WHAT WE DO
AT Env evaluates and develops risk management solutions to support an environmental liability risk transfer transaction. Since we do not work for commissions, we are neutral as to the form and structure of any risk transfer transaction. Typically our engagement letters have the following four tasks:
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Investigation and Design – In cooperation with the client’s technical consultant, we evaluate the legal, technical, political and regulatory issues that relate to the environmental risk and make the predictions necessary to design a risk transfer tool. The deliverable for this task is a document describing the design of the risk transfer tool and the plan for execution. Typically, during this step, there is education of the various stakeholders about the scope and flexibility of various risk transfer options.
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Access Risk Transfer Product – We then take the design to the risk transfer and/or insurance markets and obtain a non-binding Letter of Interest describing where the risk transfer attaches and at what price. Often this step involves a site visit and meetings with the selected provider.
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Tailor the Risk Transfer Product to the Transaction – We then bring the Letter of Interest to the client and other stakeholders to verify the risk tolerance of these persons and entities to make sure the risk transfer product fits the needs of the transaction. Tax and accounting requirements are evaluated during this step. Often numerous amendments to the program are negotiated during this period with a selected provider. The deliverable for this task is an amended Letter of Interest that fits the transaction.
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Developing the Contracts and Insurance Documents – Although we do not serve as counsel to any of the parties involved, we consult with the various attorneys representing each party involved in drafting the final contract and insurance documents. Typically there is a significant technical document describing the remedial work that is envisioned.
During all of these various steps, we are able to bring to the table consultants trained in legal, financial, technical and real estate development aspects of the transactions. Across the table from our clients are typically risk transfer providers who work on these type of transactions on a regular basis. Our engagement levels the playing field and creates an atmosphere for a successful resolution.
PROJECTS
AT Env has designed and negotiated over 30 complex risk transfer projects. Below are brief descriptions of projects that illustrate our services:
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Aluminum Waste/Three Hazardous Waste Landfills – The goal of this risk transfer project was to transfer the liability for three landfills, together with title. The client was being reorganized and the goal of the transaction was to transfer title and liability before reorganization. The challenge was to find a risk transfer company willing to take title and negotiate a transfer price that was considered successful by the client and the various creditor committees.
The transaction was structured as follows: Title was transferred to a publicly traded risk transfer company in exchange for an indemnity for all future costs regarding the landfills. Indemnity was secured by a funded insurance program with a term of 20 years. Again, the insurance was designed to respond over a fund that was held on deposit with the insurance company. If the fund ever ran out, the insurance would respond through the 20 year term. Various closure activities, as well as operation and maintenance, would be required during this 20 year period. The second form of collateralization was developed in the form of an annuity that was funded at closing and that grew unimpeded for 20 years when the insurance collateralization expired. At this point in time, the annuity would generate a stream of cash to fund the operation of maintenance for 80 years and provide further collateralization for the indemnity.
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Oil Products Transportation Assets – As part of the divestment of several thousand miles of pipeline, including related terminals, AT Env designed a risk transfer program that would be included as part of the bid process. A combination of pollution legal liability/cost cap insurance was successfully negotiated and served to support the purchase price by minimizing the liability assigned to the buyer of the assets under the purchase agreement.
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A Midwestern Superfund Site - AT Env represented the seller of assets in the context of a merger. One of the assets was a superfund site and disagreements between buyer and seller over the extent of the liability threatened the entire transaction. AT Env negotiated a funded insurance program to cap the liability to reach regulatory closure at the Superfund site, thereby paving the way for the completion of the merger.
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Portfolio of Oil Product Assets – In this instance the client was interested in capping its liability for a host of active remediations in various parts of the United States. AT Env was engaged to organize the sites into portfolios that fit various markets in the risk transfer industry and then to manage an RFP process to select one company with which to complete a risk transfer project. One portfolio was appropriate for taking direct to an insurance carrier in cooperation with an engineering firm and two other portfolios were appropriate for risk transfer companies that specialize in remediation.
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