A total $1.2 billion dollars worth of revenue debt is at stake with the $60 million Lake facility and nine other comparable properties across the country. Covanta's debt load of $149 million is due over the next 12 months.

The plant, outside of Leesburg, FL, is Lake County's most controversial commercial venture. Elected Lake officials are suing Covanta in Lake County Circuit Court, alleging the sale of the incinerator in 1988 was illegally approved by county commissioners.

Lake pays Covanta an average $6 million a year to use the incinerator. When the 25-year contract expires in 2014, Covanta, not Lake County, will still own the plant, a fact that is infuriating Lake's current board of elected officials.

Standard & Poor's lowered Covanta's corporate credit and senior unsecured ratings Jan. 16 to single B from triple B. S&P also lowered the company's subordinated debt rating to single B-minus from triple B-minus and removed Covanta from its MidCap 400 index.

"All ratings remain on CreditWatch with negative implications," according to a public report made by S&P's New York analysts Edward R. McGlade and Colleen Woodell. The ratings were placed on CreditWatch Dec. 28, 2001.

Another New York bond-rating firm, Moody's Investors Service, lowered the rating on the power generation company's senior unsecured debt to Ba3 from Ba1 on Jan. 11.

Officials at Covanta and Lake County couldn't be reached for comment at GlobeSt.com's publication deadline to learn the cause of the company's cash crunch. Officials at the New York Stock Exchange, where Covanta's common is traded under the COV symbol, also could not get the company to respond to its financial inquiry.

The Standard & Poor report, however, says Covanta is in a cash-bind situation because the company "has not reached cash balance targets that are a covenant in its bank facility." The reason: "Slower-than-expected asset sales and delays in the collection of accounts receivable from California utilities," S&P says.

Covanta is "reviewing options to strengthen short-term liquidity and to extend covenant waivers that currently run through the end of January," the S&P analysts note.

But they caution that "although there are currently no draws under the bank facility, if the banks grant no further extension, the resultant default could cause draws on a number of facilities, making it difficult for Covanta to remain solvent."

The 10 incinerator plants cited in the S&P report are financed by revenue debt rated by the New York firm.

"Although there appears to be no immediate operating impact on the facilities, Covanta's liquidity position; the ability of its subsidiaries to continue to provide project services; and the adequacy of protection of cash flow destined for debt service may at issue," the analysts conclude.

The ratings will remain on CreditWatch "with negative implications until determinations can be made regarding each facility," the S&P report says.

Three of Covanta's plants are subsidiaries and "might face greater exposure resulting from Covanta's liquidity crisis," the report says.

Ogden Corp. changed its name March 14, 2001, to Covanta Energy Corp.

Covanta's common closed Jan. 17 at $1.61 per share, up eight cents from $1.53 Jan. 16. Trading volume was 3.79 million. The company has 49.8 million shares outstanding and a market capitalization of $80.2 million. Its earnings per share are a negative $1.44. The stock's 52-week high-low is $22.85 and 92 cents per share.