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HomeMy WebLinkAboutAGENDA REPORT 1996 1106 CC REG ITEM 10ECITY OF MOORPARK CITY COUNCIL REPORT TO: The Honorable City Council FROM: Mary K. Lindley, Assistant to the City Manager ' ' Y DATE: October 29, 1996 SUBJECT: Consider G.I. Rubbish's Solid Waste Franchise Proposal Executive Summary r+ 0 11- [1:, 4�A-Lq�-C - ��. ✓. i MR ' Over the last several weeks, staff has become concerned about the representation of the proposed transfer of G.I. Rubbish to USA Waste. Specifically, the stars concerns include the description of the transfer requested by G.I. Rubbish and the entities involved in the proposed action and their relationship to one another. Staff has received answers to questions posed to G.I. Rubbish and clarification about the proposed transfer. The information received (Attachment A) differs from the information contained in the September 4, 1996, staff report. As a result the City Council is being asked rescind it action of September 4 and, once again, to consider G.I. Rubbish's request to transfer its Solid Waste Franchise Agreement in light of the new information. The Hearing to consider G.I. Rubbish's Bankruptcy Reorganization Plan is scheduled for November 14. In order to communicate the City Council's position on the transfer request, the Council needs to take action prior to that date. Background On September 4, the City Council approved G.I. Rubbish's ( Conejo Enterprises, dba G.I. Rubbish) request to transfer its franchise agreement to USA Waste. Following a G.I. Rubbish Bankruptcy hearing on October 7 in which the Judge delayed approval of G.I.'s current Reorganization Plan, the City received a letter, dated October 8, from the law firm of Nordman, Cormany, Hair & Compton, which represents Benedor Corporation, an unsecured creditor of G.I. Rubbish (Attachment B). From staffs view point, this letter raised some concerns about the way the proposed franchise transfer was described to the City Council's Solid Waste Ad Hoc Committee (Councilmember Hunter and Wozniak) and staff. Specifically, the role of Western Waste Industries had not been articulated, and as a result, the approval action taken by the City Council is not consistent with the actual legal transfer under review by the Bankruptcy Court. Specifically, the Ad Hoc Committee and staff were told that G.I. Industries, the new entity formed through the merger of Conejo Enterprises and G.I. Industries, upon the implementation of the C A1DOC SISOLID W STIGIPLAN. AGD G.I. Rubbish Transfer Request 2 Bankruptcy Plan, was to be a wholly -owned subsidiary of USA Waste Industries. After a • discussion between the City Attorney and G.I.'s attorney as a result of the letter from Benedor, it now appears that G.I. Industries will be a wholly -owned subsidiary of Western Waste Industries; Western Waste is a wholly -owned subsidiary of USA Waste. It was also the Ad Hoc Committee's understanding that they were meeting and negotiating with USA Waste representatives. This contributed to the belief that the City would be dealing directly with USA Waste through G.I. Industries. The business cards presented to the Committee identified the representatives as USA Waste, Western Region, a USA Waste Service Company. In an effort to get a clear legal definition of the proposed transfer and to identify Western Waste's role with the new entity, G.I. Industries, staff sent a letter to G.I. Rubbish. The City received a response from a USA Waste representative, dated October 21 (Attachment Q. First, this response did not come from G.I. Rubbish as requested, and secondly, the response did not clearly answer the questions asked in the letter from the City. Staff sent a second letter (Attachment D) to seek further clarification from G.I. Rubbish. After sending the second letter, the City received a Subpoena from the law firm representing Benedor requesting any written documentation concerning G.I. Rubbish's transfer request. In the Subpoena, USA Waste is referred to as US Waste Management. This raised a new question, and a third letter was sent by staff to G1 Rubbish asking for clarification about who US Waste Management is and its legal form and standing. The City received G.I. Rubbish's response to staff's questions on October 30 (again, Attachment A). The letter from Jeremy Richards states that the transfer approval requested by G.I. Rubbish is as follows: upon Court approval, Conejo Enterprises (dba G.I. Rubbish) will be merged with G.I. Industries and G.I. Industries will be the surviving entity. With the approval of the Plan, Western Waste will "own all, or substantially all (83 %) of the issued and outstanding stock of G.I. Industries ", making G.I. Industries a wholly -owned subsidiary of Western Waste Industries. Western Waste Industries is currently a wholly -owned subsidiary of USA Waste Industries. According to Mr. Richards' letter, Western Waste Industries' Board "will have the power to vote that stock and appoint the Board of Directors." In addition, Mr. Richards states that "all issued and outstanding stock of Western Waste is owned by USA Waste, which has the power to appoint the Western Waste Board." Representatives of USA Waste continue to state that day -to -day management of G.I. Industries, including the City's solid waste services, will continue to be the responsibility of Mike Smith, Mr. Smith will report to Leslie Bitterson, Regional Vice President (Western Region), USA Waste. Based on the information contained in this staff report, the City Council is being asked to rescind its action of September 4 and consider G.I.'s request to transfer its Solid Waste Franchise Agreement to G.I. Industries, a wholly -owned subsidiary of Western Waste Industries. To restate C ADOC SISOLID WSTIGIPLAN. AGD 00012N G.I. Rubbish Transfer Request 3 the conditions included in the City Council's approval on September 4, approval was given pending the following: 1) approval of G.I. Rubbish's Bankruptcy Reorganization Plan by the Court; 2) a deposit by G.I. of $80,000 to the City five days following the Court's approval of the sale; 3) G.I. approves and signs an amendment to the Solid Waste Franchise Agreement amending the term; and 4) G.I. and USA Waste approve and sign a franchise transfer document that records the transfer. Should the City Council choose to approve G.I. Rubbish's request, it may want to reconfirm the aforementioned conditions and include Western Waste Industries as a signatory to the documents identified. 4p Recommendation 1� \a Staff recommends that the City Council: 1 1. Rescind its action of September 4; �V 2 TO Rubbish's request transfer its Solid Waste Franchise Agreement to G.I. Industries; ate- COQ► 3. Direct staff to communicate the Council's actions to the Judge in the G.I. Rubbish Bankruptcy case. Attachments C ADOC SISOLID W STIGIPLAN. A(TD /I ����, ,LrrV129 10/29/96 TUE 1.9:51 FA.'ti P.A.CHULSKI STANG �L1EHL YOUNG L A W O F K I C E S MARC A. DEILTNSAN ANDREW W. CAINE LINDA F CANTOR LARRY W. CAURIEL BRAD R. COURHALL STANLYY E. GOLDICH MORA GRASSGREEN RtaiARD J. CRUnXP HARRY D. HOCHNIAN IItA D. KHARASOI ALAN J. KORNFEtfi RODERT D. ORGEL RICKARD M. PACWUL$KI JEFTREY N. POMtRANTZ 10MMY V, RICHAADS JAMES L STANC CATHERINE A. STBINER TIIOMSLR4 YOUNG DEAN A. ZtEHL Of coutiml ELLEN M. ISENDElt nRADLEY E. BROOK JAMES V-T. HUNTER GEORGE A. JUAREZ LINDA A. KIMIOS- IA1N A. W. NASATIIe AMY L WIMAN AIWOI,D M, QUrMaR WILLIAM L. AAMSEYER ADRIAN P. ROSCmF.R DON WILLENBURC •A LAW CORPORATION FItOV05IONAL CORPORATION CENTURY crry NOM BUILDING IMOO .SANTA MONICA BLVD. Surm x200 LOS ANCP.(&s, CALIFORNIA 90067 FACSIMILE 3101201 0760 TELP.PHONE 310/277 69M ?002 October 29, 1996 Ms. Mary K. Lindley Assistant to The City Manager City of Moorpark 799 Moorpark Avenue Moorpark, CA 93021 Re: In re G.I. Industries, Inc. In re Conejo Enterprises, Inc. Proposed Plan Of Reorganization Dear Mary: I am in receipt of your letters dated October 24 and October 25, 1996, addressed to Mike Smith. I am hereby responding to the issues raised in your letters on behalf of G.T. Industries, Inc. ('G.I.") and its wholly owned subsidiary, Conejo Enterprises, Inc. ( "Conejo"). First, with respect to your October 24 letter, notwithstanding the request in your October 17 letter that G.T. respond to certain inquiries set forth therein, the Company believed that it would be more appropriate for USA Waste Services, Inc. ( "USA Waste ") and Western Waste Industries ( "Western Waste ") to respond to that letter because it was in a better position to more accurately address many of the questions raised. We apologize for any inconvenience and delay that may have been caused as a result. G.I. is happy to respond to the inquiries in your October 24 letter as follows: PAWPa0100WR1C0RR1121867,1 I -OW130 OCT 29 '96 19 :52 310 201 0760 pone A;) lui4 Zji0o iur. i;i:a.t. �-9..1 . 4; 1' A C H U L S K T Ms. Mary K. Lindley S T A N G October 29, 1996 ZIEHL Paget YOUNG I. n w o F r t t e L On the Effective Date of the proposed plan of reorganization, as such plan may be further amended (the "Plan "), Conejo will be merged into G.I., with G.I. being the surviving corporation. As a result of certain stock transfers that have already taken place and additional transfers from Manuel Asadurian, Sr.; Sam Asadurian and Carl Asadurian (collectively, the "Asadurians ") to Western Waste, which it is anticipated will take place on or about the Effective Date, Western Waste will own all, or substantially all of the issued and outstanding stock of G.I. Prior to May of 1996, Western Waste was a publicly held corporation. In May of 1996, Western Waste became a wholly -owned subsidiary of USA Waste, which is itself a publicly -held corporation. 2. As more fully set forth in subparagraph 1, above, the current legal names of the entities involved in the Plan related transactions are as follows: corporation; (a) Conejo Enterprises, Inc., a California (b) G.I. Industries, Inc., a Utah corporation; (c) Western Waste Industries, a California corporation; and (d) USA Waste Industries, Inc., a Delaware corporation. As noted above, unless the Plan is modified to eliminate the proposed merger, Conejo Enterprises, Inc. will not survive confirmation of the Plan, but the three other entities will F:\WP1301001T TORZ121567.1 r 000131 OCT 29 '96 18 =52 310 201 0760 PAGF_A7 Ia 003 10/29/96 TUE 19:5 .1. FAX :y:.`. P A c: H U L S K t Ms. Mary K. Lindley S T A N G October 29, 1996 ZIEHL Page YOUNG LA W 0J71,1cs5 maintain their separate legal identity and names after the Effective Date. 3. As more fully set forth in subparagraph 1, above, since May of 1996, Western Waste has been a wholly -owned subsidiary of USA Waste. Western Waste currently owns approximately 39% of the issued and outstanding stock of G.I. and, in the event the Plan is confirmed and the Asadurians sell their G.I. stock, Western Waste will own approximately 83 % of the issued and outstanding stock of G.I. as of the Effective Date, 4. As of the Effective Date, G.I. will be wholly, or substantially wholly -owned by Western Waste and Western Waste will, in turn, be a wholly -owned subsidiary of USA Waste. 5. Western Waste is incorporated in the State of Delaware and USA Waste, in the State of Delaware. 6. As of the Effective Date, substantially all of the issued and outstanding stock of G.T. will be held by Western Waste, whose Board will have the power to vote that stock and appoint the Board of Directors of G.I. In turn, all of the issued and outstanding stock of Western Waste is owned by USA Waste, which has the power to appoint the Western Waste Board. As has been stated repeatedly, the day -to -day management of G.I. and, in particular, the day -to -day responsibilities of Mike Smith, will not change upon confirmation of the Plan. Mike Smith will report to Leslie N. Bittenson, Regional Vice President (Western Region), USA Waste. F, WP130100UMCORR1121967.1 w Z 004 (ML32 OCT 29 196 19 53 310 201 0760 PArF.Aa 10i29i96 TUE 19 52 FAC,. PAC H U I, SKI Ms. Mary K. Lindley S T A N G October 29, 1996 ZIEHL Page YOUNG L n w o V r• i c F. s 7. While I do not wish to rephrase Mr. Hutton's letter of October 21, I believe that rather than using the words "form" and "substance ", his letter might more accurately have drawn a distinction between the legal structure of the transaction and the organizational structure of the transaction. From a legal standpoint, G,I. will be a wholly, or substantially wholly -owned subsidiary of Western Waste, which is in turn a wholly -owned subsidiary of USA Waste. However, from an organizational standpoint, USA Waste will exercise general oversight and control over G.I., although as set forth in paragraph 6, above, day -to -day control of the G.I, will remain vested with Michael E. Smith. With reference to your October 25 letter, I believe that either Mr. Etchingham is ignorant of the true facts, or he is being deliberately misleading. There is no such entity as "U.S. Waste Management." I believe that Mr. Etchingham is referring to USA Waste Services, Inc. Additionally, Mr. Etchingham is incorrect when he states that USA Waste "merged" with Western Waste in May of 1996. On the contrary, Western Waste merged into a wholly -owned subsidiary of USA Waste, Riviera Acquisition Corp., with Western Waste the survivor of the merger. By this transaction, Western Waste became and remains a wholly -owned subsidiary of USA Waste. There was a "merger" in the sense that USA Waste assumed ownership and control of Western Waste, but, as a legal matter, Western Waste retained its separate legal identity. I trust the foregoing adequately responds to all of the questions you have raised regarding confirmation of the Plan and once again apologize for not directly responding to your F: \W M0 ] oowRXC0RR1121867.1 Z005 OCT 29 '96 18:53 310 P01 07A0 pore aq 10/29/96 TLTE 2.9:52 F;b.: 2006 P A C T-T U L S K T Ms. Mary K. Lindley S T A N G October 29, 1996 ZXEHL Page 5 YOUNG L 4 W D F F I C" F 5 October 17 letter. If there are any further questions, or if you require any additional clarification,` lease do not hesitate to contact me as soon as possible. � 1 Very truly JVR/Jg cc: Cheryl J. Kane, Esq. Michael E. Smith Joel Ohlgren, Esq. Lawrence A. Bass, Esq. F:\WF\30100\JVRNC0RR\121867.1 1.34 OCT 29 196 19:53 310 201 0760 Parr A9 OCT- 1F_) —t996 wiyw H. ww r+MVV vr° ;;pw "-Mb1" •%& 0"W"Of" At ►y1� a. .W�r�i�rrwj �w� /Mi1L M..11M -.M A� r 0A 5L IW1 -i-W IN�fr w.Igy�.. M.AW. O&AMI's OMrM7�O�.�d1- ew woNwr �, IIMr .ash" r6 MMw. W. L ...rw+. o•or�.reM wwev waa.Iq 113- LAW OFMCCO OF NARr*"LN, CORMANY. HAIR & COMPTON '0060 Tow" cc"Tcn orwo a rN Fwc,► fter owcoo mm o (oo 1nXMA n. C^UrOnfWA 9=11 -0100 (al00) 4GS_1000 (aao+) COO-00014 erm Ri ooF1 FAX (906) D8B4W7, -STH FLOOR FAX MM SOR -7760 October 8, 1990 Cheryl J. Kane Attorney at Law Burke, Williams i Sorenson 611 Weat sixth street, suite 2500 Los Angeles, California 90017 PACE 5 (� Prac h hl& n lJ amR"000" (1..• 7.M ourw L 000*A". VWAQV 9V%6*4HMSC. WCOO *6643¢e VYf ai'ACSI>MtSLE 413w436- 27�f1�D 1rIR8T C8$ ]�AYL Re: In re Conejo Waterpariaes, Inc., VSBC Case loo. xV 94- 11e70 -JM and In re 62 industries, Ines, OABC Cage Yo. 02- 71021 -R1!/ City of moorpark's Conditional Consent to Merger of Conejo Enterprises dba G.Z. Rvbbisb Into CT Industries and Related Xatters Dear X9. Kane: My law firm rAprPsents Benedor Corporation ( "Benedor "), an uneecured creditor of Conejo Enterprises, Inc. dba C._. Rubbish (I'Conejo „) in the ahOVA- referenced bankruptcy cases. Yesteraay bankruptcy Judge Robin Riblet continued the confirmation hearing involving G.T. Industries, Ync.'s (11G.i.'slr) 9th Amended Consolidating Plan Of Reorganization With Conejo ( "G.I.•s Plan ") to November 14, 1996 at 9:00 a.m. P- Anador is particularly interested in Judge xiblaat's aYF+ivvdl of d.I.'a Plan which is oonditionod upon the following: i_ G.I. obtaining consents by each of the local municipalities, including Moorpark, to (a) the gale of C.X. otock ownership to, Western waste induetrien and (b) the aaaiVjnU*nt of tho variouaa municipal franchise agreements from Conejo to G.I.; and 2. C.I.•a Plan providing protocticma to Bonedor whnrahy the value of the mergea Conejo /G.I. assets remA in the same or increase pending the outcome of Benedor's claim li'tigatinn with Conejo. OW1,33 JAN 03 100 22:01 213 236 2700 PAGE.03 OC7 -1_ @- .qaF _.2 � iLs 27�_1E a. e41e5 iu PACE Cheryl J. Kane Attorney at Law October a, 1996 Page 2 Obviously some of the moat. valuable assets of the merged Conejo /G.z. are the current solid waste franchise agreemento with the Cities of Simi Valley, Thousand Oaks and Moorpark ae well as the County of Ventura. Consequently at yesterday'a hearing, Benedor made reference to the City of KoorparK's Conditional consent datod SopYawber 10, 1996 (the "Conditional Consent ") which appeared to violate the Court's condition or protecting nenedor bocause t:ha Conditional Consent states that Moorpark approved Conejo's request for the transfer of the solid waste franohise agreement from Conejo tv V.B.&. Waste rather than G.I. In agreement with Benedor's voiced concern that allowing the transfer of Moorpark's franchise to U.S.A. Waste violatan the court's condition Lo, protect Benedor by maintaininq Conejo /s. I .' a combined assort value, Judge Riblet requested that the City of Moorpark files an amended pleading which corrects the apparent mistake related to trio transfer of Moorpark's solid waste collection rranchise with Conajo. G.T.IS attorney also reproaented to tha Bankruptcy Court that Moorpark's Conditional ConsentO6 referenoe to the transfer of the frenchiac to U.S-A. Waste was in error. Please confirm that MoorparXIa consent to G.I.'s Plan includas consents both to the sale of G.I. stock ownernhi.p from the Asadurians and others to Western Waste IndusLtles and the tranefor of the Moorpark franchise from Conejo to G.I. Also please confirm that Moorparx's conditl.utial consent does riot requires the transfer of the Moorpark franch i.ne with either Conejo or the merged C . Y . to either Western Maine or U.S.A Waste. zn a related matter, GY'a counsel, Jeremy Richards, esq., stated that tha tarn of the Moorpark franchise agreement was not being changrci at all pursuant to the conditional consent of the City of Moorpark and that the franchise►, agreement has always provided Cor a two year term with 2 throe-year options. ("13f; JAN 03 '00 22:01 213 236 2700 PAGE.04 2 n.q9h x.05/06 PACE 3 Charyl J. Kane Attorney at Law October 8, 1996 Page 3 This geese to contradict the August: 21f 1996 Moorpark Staff report Which states that the current Solid Waste Agreement between Koorpark and Cone7o has a rive year term from December 230 1995 to December 22, ;000_ The Conditional Consent requires an amended term of two years to begin following the sale of G.=. stock to western Waste and an extension to the veer 2000 it t?!o city council dose uot�ake a tion to find_tbat AcrragAS03. Apperantly the required terra amendment wac inaarted to address the Moorpark Ad Roc committeefs concerns referred to below. please confirM your understanding and explain whether Moorpark's conditional consant requires an amendment to the term of the franchise agreement. At the October 7th hearing, Judge Riblot alas asked western waste's counsel for clarification of the current legal status of Wastern Waste industries in light of the Auguat 21, 1996 city or Moorpark Staff Report which states that "there in no longer a company known as 'wey.Larn waste." WestarnF9 Counsel otated that western'waste Industries continues to exist an a wholly owned subsidiary of U.S.A. Waste and that Western Waste industries will continue to maintain a presence Ln southern California And own G1 Industries, Inc. which, in turn, will maintain ownership of the Xonrpaz:k Franchine as Reorganized Debtor after Conelo.is merged into at. The Staff Report also mentions that KoorparkPs Ad xnc: C0=ittee "expressed coneerna about Western Waste's reputation of corruption on the part of high level staff." please confirm and explain whether the continued involvement of Western waste with C.T. and the Moorpark franchises Affects Moorpark's conditional consant to C.I -10 Plan. Finally, what is the status of Moorpark's Conditional consent in light of the Bankruptcy Court's refusal to approve C.I_'a plan at he8,ring an October 7, 19967 Do you expect that cunejo Will deposit a rrannhise Transfer Fee tit the amount of $80,000 with the city of Moorpark on or before October izo 19967 Thank you for your anticipated cooperation in responding to this Setter. Aline, please add iRe to your narvice list with respect to doCunants which relate to G.Z.'!. Plan, moorparklc Conditional Consent:, or the bankruptcy cases raferred to above. Pleaao do not hea►iLate to call me if you have any queotions OWIL37 JAN 03 '00 22 :01 213 23F �)7AA parr Ac� ID: PAGE Cheryl J, Kane Attorney at Law October 8, 1996 Page 4 related to the matters rere.rred to above or any other matter. very truly yours, HORDMAN, CoMgANY, HAIR & COMPTON Gerald M. Ct C sham GME: tgb CC: Denedor Corporatian William H. Hair, Esq. Jeremy Richards, Ecq. t3M.1xl/f0669.= I TOTAL P.06 JAN 03 100 22:Rl onr^= n� 4 A USA VJASTE SERVICES COG7PANY October 21, 1996 Mary K. Lindley Assistant to the City Manager City of Moorpark 799 Moorpark Avenue Moorpark, CA 93021 Dear Ms. Lindley: f1EGEIVED OCT 2 4 1996 CfTY OF MOORPARK 709 MOORPARK AVENUE M00805R529 -0864 021 21061 S. Westem Ave. Torrance, CA 90501 (310) 222 -8614 (310) 212 -7094 Fax By way of introduction, I am Regional Counsel for USA Waste Services (USA Waste). Your letter of October 17, 1996 has been forwarded to me from Mike Smith of G.I. Industries for my review and response. I have reviewed all of the of recent correspondence, and wish to confirm understandings of you and the City Council at the time the transfer was that the accurate, and were consistent with prior correspondence received by the City from Industries or Western Waste Industries. If there has been an approved were that it has resulted from the difference between the form of the t y m G.I. y confusion, it appears substance. In essence, the onl transaction and its Industries will become a second -tier hollytowned subsidiary of USA was that G.I. a first -tier wholly -owned subsidia Waste rather than Waste, is also under the ownership and control of tUSArsWaste subsidiary, transaction is that G.I. Industries will be under the ownership, m ry' Western the effect of the Of USA Waste. management and control The City's understandings, as set forth in the second paragraph of correct in substance. The action requested from the City was totransf from Conejo Enterprises; Inc. to G.I. Industries, a USA Waste Your letter, are Waste will have ± transfer the franchise he ultimate control and ownership over the stock of G.I. Industries and substantive control over its operations. Company. USA membership of the G.I. Industries Board of DirectorsA Waste will also determine the Day to day operations will be the responsibility of Mike Smith Les Bittenson, Regional Vice President for USA Waste. ' who will in turn report to Mr. Bittenson was asked to assume the role of President and Chief Operating Officer of Western Waste by John Drury, Chief Executive Officer of USA Waste by USA WastefWestem Waste merger and, for the purpose of integrating Western ern of the into USA Waste. Since completion of the merger Mr. Bittenson has Wes Waste appointed as a corporate officer of USA Waste, and reports directly to Mr. addition rybeen Drury. .OWIL39 BH- 107.96 USA WASTE 21061 S. Western Ave. WESTERN REGION ' Torrance, CA 90501 (310) 222 -8614 (310) 212 -7094 Fax Mary K. Lindley October 21, 1996 Page 2 of 2 As can be seen, both ultimate legal ownership and substantive control of G.I. Industries will, upon approval of the Plan of Reorganization, reside with USA Waste and its management team. There may have been confusion because of the precise form and mechanics of the transaction, as presently before the Bankruptcy Court. This issue was discussed in a June 28, 1996 letter from Les Bittenson to City Manager Steve Kueny. The Plan before the Bankruptcy Court was to transfer the G.I. Industries shares to Western Waste. During the Plan process, USA Waste assumed ownership and control of Western Waste. The USA Waste/Westem Waste merger was completed in May, 1996. As of the date of the merger Western Waste was no longer a public company and became a wholly -owned subsidiary of USA Waste. However, rather than risk further delay it was decided by USA Waste to leave the form of the transaction as it had been previously presented to the Bankruptcy Court The form of this transaction in no way changes the fact that Western Waste is now wholly -owned and controlled by USA Waste. USA Waste determines the membership of the Western Waste Board of Directors. I hope that this explanation clarifies the situation, and we apologize if there has been any misunderstanding. The bottom line is that both the City's understandings and our understandings of the substantive effect of the transaction were accurate and in agreement at the time the City Council took action approving the transfer. Please do not hesitate to contact me if you have any questions, or if I can be further assistance. Sincerely, E. William Hutton Regional Counsel cc: Steve Kueny, City Manager Cheryl Kane, City Attorney Jeremy Richards, Esq. Mike Smith Joel Ohlgren, Esq. 000 140 BH- 107.96 MOORPARK o m 799 Moorpark Avenue Moorpark, California 93021 (805) 5re-y -6864 October 24, 1996 Mr. Michael E. Smith Chief Executive Officer G.I. Industries P.O. Box 647 Simi Valley, CA 93062 Dear Mike: On October 22, the City received a letter from Mr. William Hutton, Regional Counsel from USA Waste, Western Region dated October 21, 1996. I was disappointed that the response to the City's request for clarification came from USA Waste rather than from G.I.'s legal representative, as I had requested. The City has a contractual relationship with Conejo Enterprises Inc., dba G.I. Rubbish, and G.I. Rubbish has requested the City's approval to transfer its Solid Waste Franchise Agreement. In order to fully evaluate the request, it is imperative that the City have a full and accurate accounting of the transfer action being requested. I think that we all agree that some confusion has been created as demonstrated in the various correspondence the City has received from the parties involved. Further more, it is imperative that the City receive this accounting from G.I. Rubbish as the party with the direct relationship with the City and as the party making the request for the transfer approval. I would prefer the accounting be provided by your legal representative since what we are requesting is a legal description of the transfer proposed by G.I. Rubbish. Again, let me state that the City is requesting a specific response from G.I. Rubbish which includes: 1) a legal description of the proposed transfer; 2) the current legal name of the three entities involved (G.I. Rubbish, Western Waste, and USA Waste Services) and their legal name if the current Bankruptcy Plan is approved and implemented, 3) the current legal relationship between G.I. Industries and Western Waste Industries, G.I. and USA Waste Services, and Western Waste and USA Waste Services; 000l4l PAUL W. LAWRASON JR. JOHN E. WOZNIAR ELOISE BROWN PATRICK HUNTER BERNARDO M. PEREZ Mayor Mayor Pro Tem Councilmember Councilmember Councilmember Mr. Michael Smith October 24, 1996 Page 2 4) upon approval of the current Bankruptcy Plan, the proposed legal relationship between G.I. Industries and Western Waste, G.I. and USA Waste Services, and Western Waste and USA Waste Services; 5) the State of incorporation or registration for Western Waste and USA Waste Services; and 6) the identification of who, upon the approval of the current Bankruptcy Plan, will have control over G.I. Industries stock and the appointment of its board of directors. In the letter from USA Waste, Mr. Hutton provided generalities by using phases like "in essence ", "a second -tier wholly -owned subsidiary", "correct in substance ", and "substantive control ". Such phases only lead to more questions. Mr. Hutton also states that the confusion may have resulted from the "difference between the form of the transaction and the substance ". I would like to know what that difference is. I would appreciate a prompt reply. If you or your attorney needs to contact me, I can be reached at (805) 529 -6864, extension 217. Sincerely, Mary K. Lindley Assistant to the City Manager cc: The Honorable City Council City Manager City Attorney C:IDOCSI WPDOCSIG1RUB.LTR VVu4z