Synagro Technologies, a Baltimore-based waste recycler owned by the Carlyle Group, filed for bankruptcy protection Wednesday, just days after defaulting on its debt.
Carlyle, the D.C.-based private equity giant, borrowed money to take the publicly traded company private in a $772 million deal in 2007.
In the ensuing financial crisis, municipalities slashed spending, which caused a significant decline in Synagro’s revenue.
Synagro chief executive Eric Zimmer said the company has strong profitability, but was not able to grow fast enough to meet its debt obligations.
About a year ago, Zimmer said, “It became clear to all constituents that the best alternative was to look at marketing the company.
“We have marketed the company through a very structured process . . . the result of that has been multiple offers.”
The company was part of Carlyle’s infrastructure fund.
Synagro filed for Chapter 11 bankruptcy protection as it finalized a sale of its assets to EQT Infrastructure II for $455 million.
The bankruptcy filing was not a surprise to Carlyle, which had written off the investment years ago, but it represents a rare misstep for the private equity firm.
A Carlyle spokesman declined to comment.
Zimmer said that Synagro’s involvement in a Detroit municipal scandal three years ago had no bearing on the sale. In that affair, James R. Rosendall Jr., a former official with Synagro, and a Detroit City Council official pleaded guilty to bribery charges in connection with a $1.2 billion contract that Detroit awarded in 2007.
“Detroit was a matter in which the company had an issue up there with a singular employee that was addressed,” Zimmer said. “It has had nothing to do with our financial position today.”