Transpacific sells Waste Management to Chinese for $950m

Photo / APN

Australia's Transpacific Industries said it had entered into an agreement to sell its New Zealand business - once the NZX-listed Waste Management - to a wholly-owned subsidiary of Beijing Capital Group for $950 million.

Beijing Capital Group is one of China's top 500 enterprises and a leading state owned infrastructure enterprises with specialist expertise in water treatment, waste management, mass transit railway and toll roads, Transpacific said in a statement.

By the end of 2013, Beijing Capital had total assets and revenues exceeding US$21 billion and US$3.7 billion, respectively.

The company employs around 20,000 people across its regional and international businesses.

Completion of the sale is expected to occur by the end of June 2014 subject to New Zealand Overseas Investment Office and Chinese regulatory approvals, Transpacific (TPI) said.

Proceeds from the sale will allow TPI to redeem preference shares, refinance its syndicated debt facility and fund future investments with a strong capital base.
TPI, which over-extended itself in the lead-up to the Global Financial Crisis after a string of large acquisitions, said it would also consider the resumption of dividends in the near term.

"The sale of our New Zealand business gives Transpacific increased financial flexibility,'' Robert Boucher, TPI chief executive Robert Boucher said in a statement.

"We will look to enhance our Australian waste management businesses, capture long term growth opportunities and generate improved shareholder value,'' he said.

Beijing Capital Group is focused on investing in and developing the New Zealand business. Deutsche Bank acted as financial adviser for the sale.

The process of selling the New Zealand operation went down a so-called "dual track", with a trade sale being actively weighed up against the option of an initial public offer and float.

A trade sale was seen as the most likely option because it was seen offering the cleanest and most profitable exit for TPI than a share market float could have achieved.

The New Zealand company traded previously as Waste Management and was headed up by Kim Ellis. The company was one of the share market's highest performers before it was taken over by Transpacific for $870 million in 2006.

The company now has more than 200,000 customers and 800 trucks. Landfills are an important part of the business. Among the seven major landfills nationwide, Transpacific's Waste Management has five.

There are just two players in the New Zealand refuse collection and landfill business. Transpacific Waste Management and its smaller competitor, Envirowaste, which was sold last year.