Wednesday 26th October 2011
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Trans-Tasman waste management company Transpacific Industries plans to raise up to A$309 million to refinance its business after writing off A$347 million from the value of its assets.
Transpacific is forecasting its earnings before interest, tax, depreciation and amortisation (EBITDA) will rise to A$454 million in the year ending June 2012 from A$424.5 million the previous year.
It expects to post a net profit between A$40.5 million and A$84.5 million in 2012 compared with the A$296.5 million net loss it reported for 2011 which included the write-downs. Net profit in the year ended June 2010 was A$59 million.
Conditional on it raising at least A$260 million, which has been underwritten, the Queensland-based company said it has secured a A$1.525 billion 4.1 year credit facility to replace an existing 1.9-year A$1.435 billion facility.
Transpacific says the new facility will reduce its annualised interest bill by between A$21.8 million and A$24.8 million in the year ended June 30, 2012 and by between A$31.3 million and A$34.3 million a year over the medium term.
It will also allow it to repay its A$115 million five-year and A$54 million 10-year USPP borrowings early and it may also buy back its A$309 million in convertible notes.
Major shareholder Warburg Pincus has underwritten the equity raising by A$207 including its own entitlements which could see its shareholding rise from its current 33.9 percent to as much as 49.9 percent.
“This refinancing package will reduce borrowings, extend our debt profile and decrease interest expense significantly, in turn allowing us to maximise profitability,” said chairman Gene Tilbrook in a statement.
“It will also give us the flexibility to build on our strong market positions and take advantage of the organic growth opportunities in our core waste management businesses,” Tilbrook said.
The company will continue to focus on cutting debt through increasing operational cashflow, reducing working capital and the possible divestment of surplus properties and non-core assets, he said.
Tilbrook said the forecasts are based on current economic trends and conditions in Australia and New Zealand and the first quarter's trading “indicates we are on track to meet this forecast.”
Of the equity raising, A$260 million will come from institutions and A$49 million from retail shareholders who are being asked to buy nine new shares for every 14 they hold at 50 Australian cents per share.
While listed on NZX, the shares rarely trade in New Zealand. They closed at 69 Australian cents on the ASX yesterday.
Of the company's write-downs, A$181.5 million was on the New Zealand-based Waste Management for which Transpacific paid NZ$870 million in 2006.
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