Sharechat Logo

Transpacific Industries puts kiwi waste management on the block

Wednesday 30th October 2013

Text too small?

Transpacific Industries, the Australian waste manager, has put its New Zealand business up for sale, two years after writing downs the value of the kiwi unit.

The Queensland-based company has hired Deutsche Bank to help sell the New Zealand business after the board decided to put greater focus on its more profitable Australian business, it said in a statement. Any proceeds would be used to pay down debt.

"The quality of TPI New Zealand's assets, its leading market position, its people and its strong customer relationships are expected to attract interest from investors that are well-placed to develop and grow that business," chairman Martin Hudson told shareholders at today's annual meeting in Queensland, in speech notes published on the ASX.

"It goes without saying that we will only proceed with a sale of this business if it appropriately reflects value for our shareholders," he said.

In 2011, Transpacific wrote down the value of its New Zealand assets by A$182 million, something seen as an admission by the company that it paid too much in 2006 with its $870 million acquisition of Waste Management New Zealand. The New Zealand unit's goodwill was valued at A$587.7 million as at June 30.

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.

Transpacific's New Zealand assets have forecast earnings before interest, tax, depreciation and amortisation of about $110 million in the 2014 financial year. If the sale was at the same 10 times earnings multiple as Hong Kong-based Cheung Kong Infrastructure Holdings' purchase of local rival EnviroWaste, it could reap as much as $1.11 billion.

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.

The dual-listed shares are listed but rarely trade on the NZX. The stock fell 1.9 percent to A$1.04 on the ASX yesterday, having gained 33 percent this year.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Govt opts for sweeping review of 'underperforming' RMA
AFT gains Australian registration for intravenous Maxigesic
24th July 2019 Morning Report
Should Fletcher Building persist with Australia?
NZD weaker as greenback gains on news US-China trade talks to recommence
MARKET CLOSE: NZ shares extend gain as Mainfreight, A2 hit new highs
StretchSense directors appoint administrators
NZ dollar falls on news RBNZ is looking at "unconventional" policy
Wrightson capital return gets shareholder approval
Morrison & Co eyes asset sales from first PIP Fund

IRG See IRG research reports