A statement from the company announced the terms of a proposal supported by the majority of its key senior lenders to recapitalise and strengthen the business. The arrangements are to be finalised in early 2013.
Should the announced proposal be concluded it will bring to an end much discussion about the future. There had been expectations that parts of Biffa could be sold off or subject to a management buy-out or that the company might have faced difficult financial decisions.
Debt reduction
Todays statement said that the proposal will provide a substantial reduction in the companys debt and a cash injection of 75 million from funds advised by Angelo Gordon & Co, Avenue Capital Group, Babson Capital Europe Limited and Sankaty Advisors, (the New Shareholders).
The 75 million of new investment from the new shareholders will be used to fund a new infrastructure programme designed, said Biffa, to reinforce the companys position as a leading force in collection, recycling and technologically-led waste recovery. Following implementation of the proposal the New Shareholders will become the majority shareholders of the Company.
As part of the transaction, Biffas capital structure will be substantially strengthened, with total debt being reduced by approximately 55% to 520m from over 1.1 billion.
Supportive
The statement also noted that the new shareholders are 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.
‘The recapitalisation will provide the company with significant new investment’
Ian Wakelin, chief executive, Biffa
Ian Wakelin, chief executive of Biffa, said: We are delighted to announce this important milestone towards the financial recapitalisation reaching a successful conclusion. The recapitalisation will provide the Company with significant new investment, bring long-term financial stability to Biffa, and provide an excellent platform to move forward as we grow and develop the business further.
A spokesperson for the lead new shareholders said: “We are pleased to have supported the Company throughout this process and provide the new investment to further strengthen Biffas position for the future. Through the expertise of our people, we look forward to completing the recapitalisation of Biffa and then working with management to enable the business to progress and grow.
Biffa commented also on its recent activities saying it has a turnover of about 1 billion and continues to be profitable.
The statementsaidThis is underpinned by several major new business wins including a 10-year contract with Mid-Kent County Councils, a 7-year contract with South Staffordshire Council, and an agreement to implement and manage a new recycling system for Odeon Cinemas.
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“Furthermore, the Company has recently won a number of awards including the 2012 Co-Operative Award for Innovation, and in partnership with the Vale of White Horse and South Oxfordshire councils, has achieved the highest combined recycling, reuse and composting rates in England.
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