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Indicative bids on Transpacific Industries' NZ unit close today

Thursday 5th December 2013

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Potential buyers of the New Zealand unit of Australian waste manager Transpacific Industries have until the end of the day to make their interest known, with indicative bids closing.

The first round of bidding will provide a steer for the Queensland-based company as to what it might reap from the sale of its New Zealand waste management business, rather than any firm offers, according to a person familiar with the process. BusinessDesk understands the sale has attracted interest from private equity firms, including KKR, and local infrastructure investor Infratil.

Transpacific hired Deutsche Bank in October to help sell the New Zealand business, and is understood to be open to either a trade sale or an initial public offer of what was once the NZX-listed Waste Management.

While an IPO might attract a bigger return in the current environment, Australian institutions holding ASX-listed Transpacific shares may be unwilling to buy into another listed waste manager, meaning a trade sale could be a more attractive route.

Transpacific's New Zealand assets have forecast earnings before interest, tax, depreciation and amortisation of about $110 million in the 2014 financial year.

The 2006 Waste Management takeover irritated New Zealand regulators because Transpacific used amalgamation rules with a lower threshold for acceptances to take control of the target. In 2010, former Commerce Minister Simon Power to take steps to shut the loophole.

The company's decision to scale back its business comes after a debt-fuelled expansion before the global financial crisis, culminating in 2008 with the A$1.25 billion acquisition of rival Cleanaway to create Australasia's biggest waste disposal firm.

Since then, Transpacific has been clamping down on debt, and today it also announced it had refinanced A$290 million of syndicated facilities set to mature next month. As at June 30, the company had borrowings of A$1.05 billion, down from as much as A$2.45 billion in 2009.

Shares in ASX-listed Transpacific fell 0.4 percent to A$1.135 today, and have climbed 46 percent this year.

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