Ironbridge cautious over waste firm's sale

Kim Ellis. File photo / Wayne Drought

EnviroWaste's owner, private equity company Ironbridge, will take a wait-and-see approach over the possible sale of the waste management company while a similar transaction takes place in Australia, market sources said.

In a short statement to the ASX, Australia's Transpacific Industries Group said it had undertaken a due diligence book-checking exercise on Thiess Waste Management.

Transpacific, which together with EnviroWaste dominate the New Zealand waste management and landfill sector, has approached the Australian competition authority - the ACCC - over the possible acquisition.

Sydney-based Ironbridge last month said it had appointed investment bank Macquarie Capital to explore sale options for EnviroWaste - New Zealand's second biggest waste management company after Transpacific. While an initial public offer (IPO) would be one possible avenue, it is not one that insiders expect the company to take.

EnviroWaste is chaired by Kim Ellis, the former chief executive of the once NZX-listed Waste Management, which was taken over by Transpacific in 2006.

Ellis confirmed that Thiess Waste - Australia's sixth biggest waste management company - would have special relevance for EnviroWaste and Ironbridge.

"It will be interesting from the point of view of pricing," Ellis said. "We would want to make sure that we are not compared too closely to Thiess because we think we have a far superior business."

Ellis said that if EnviroWaste was not off Ironbridge's hands by the end of this year, it would be withdrawn from sale.

"Ironbridge is not under pressure to sell the business - not from any impression that we have had," Ellis said.

He said an IPO was highly unlikely.

"I, and many others, would love to see EnviroWaste on the stock exchange, and I would love to be a part of that process. But the pricing just would not be there, so it's not even a consideration."

Ellis said EnviroWaste was likely to attract trade or other private equity investors.

Thiess Waste is part of Thiess Services, which belongs to Australian engineering giant, Leighton Holdings, which is majority-owned by Germany's Hochtief.

The company, like EnviroWaste, is involved in waste collection, recycling and recovery, and landfill ownership.

Thiess' clients include local councils, mining companies, and commercial and industrial customers.

Market sources said the sale process for Thiess Waste looked to be advanced. If it happened, it would happen before the end of July, they said.

One source said a successful sale of Thiess Waste would give Ironbridge good "line of sight" on EnviroWaste. "It will provide an indicator as to the demand that there might be for it," he said.

Out of all the options, a sale to another private equity player appeared to be the most likely.

EnviroWaste is understood to have a $500 million to $600 million price tag.

Ironbridge bought EnviroWaste from Fulton Hogan for $365 million in December 2006.

EnviroWaste has assets up and down the country, including the Hampton Downs landfill near Huntly.

The company was one of two large transactions made by Ironbridge just before the 2008 global financial crisis.

The second was MediaWorks, whose assets include TV3, RadioLive and More FM, which cost $741 million in a leveraged buyout in 2007.APNZ