Biffa completes £1bn recapitalisation

The agreement, which was approved by all senior and junior creditors, means that Biffas secured debt reduces by 55% and there is an injection of £75 million in new money. As a consequence, the integrated waste management business has drawn up an investment plan worth £250 million over the next five years.

As part of the transaction, Biffas capital structure has been substantially strengthened, with the total debt being reduced by some 55% to 520m from over £1.1 billion. The original debt had been held by Montagu Private Equityin partnership with Global Infrastructure Partners and HBOS Fund Investments who took Biffa private in 2008 at a cost of £1.7 billion.

New shareholders

The recapitalisation plan was announced on November 29 2012 (see letsrecycle.com story) and means that the new shareholders become the majority shareholders in the company. Several of the new shareholders have strong American fund management connections. They are: Angelo Gordon & Co, Avenue Capital Group, Babson Capital Europe Limited and Sankaty Advisors.

The new shareholders said in November that they were fully supportive of the existing management team as they continue to develop and strengthen the company by building on its leading position in the UK waste management market.

‘These funds have said this is a really good business’
Ian Wakelin, chief executive, Biffa

A source close to the recapitalisation told letsrecycle.com that Biffa is now a very stable business and has a five-year plan in place. The amount of support from the lenders is quite telling. It is a real endorsement of the capitalisation and a sensible outcome.

Positive

Speaking in December about the refinancing process, Ian Wakelin, chief executive of Biffa, told letsrecycle.com that he had been working on the restructuring for the best part of 2012 and that the investment funds involved were very positive about the deal.

These funds have said this is a really good business which is clearly too highly leveraged and has too much debt. With sensible terms they are willing to invest their cash, saying we think this is a great business and something we can get involved with. (see letsrecycle.com story).

Mr Wakelin explained, before Christmas, that the new ownerswill “own a very large part of a business which is very profitable and cash generating. With that debt written down we can now invest more the company has been under invested for a number of years.