20 September 2012

Sterecycle goes into administration

By Amy North

Autoclave specialist Sterecycle has gone into administration following a significant downturn in trading results.

Joint administrators Guy Hollander and Mike Wellard from accountancy firm Mazars were appointed to the Sterecycle group of companies – Sterecycle (Rotherham) Limited, Sterecycle Management Services Limited and Sterecycle Holdings Limited – on Tuesday (September 18th). They will now manage the firm while a buyer is sought.

Sterecycle operates an autoclave facility in Rotherham

Sterecycle operates an autoclave facility in Rotherham

Sterecycle operates an autoclave facility at Sheffield Road in Rotherham which has the capacity to handle 175,000 tonnes of waste every year. The facility is one of the only autoclaves of its kind in the UK to sterilise waste using steam and high pressure and recover recyclables.

In a statement, Sterecycle linked the decision to call in the administrators to the falling value of recyclables and delays in getting listed on the Toronto Venture Exchange, through which it was hoping to secure new investment.

A desire by the Barnsley, Doncaster and Rotherham (BDR) Waste Partnership, which is the firm’s main client, to renegotiate their waste treatment contract with the company has also been blamed.

Sterecycle said: The Board of Sterecycle has concluded that in light of a significant downturn in trading results following a substantial fall in global recyclate prices and protracted delays in obtaining approval to proceed with a public listing on the Toronto Venture Exchange the financial position is such that it should commence administration proceedings.

Tom Shields, Sterecycle chief executive, added: It is with great sadness that the Board has today reluctantly decided to call in an administrator having explored all practical options to continue trading with the company in its present form. I would thank all those who have supported the company through this difficult time.

BDR

Speaking to letsrecycle.com, Mr Hollander explained how Sterecycles financial difficulties were partly linked to the BDR looking to renegotiate its contract with the company in terms of quantity and price.

He said: Sterecycle was in discussions with the BDR councils which are their main customer who provide them with the waste. They [BDR] were looking to renegotiate the contract. These factors were causing the company financial difficulty meaning they were facing more pressure from creditors.

“It is with great sadness that the Board has today reluctantly decided to call in an administrator having explored all practical options to continue trading with the company in its present form. I would thank all those who have supported the company through this difficult time.”

– Tom Shields, Sterecycle

Also, over the last few months the value of recyclate such as metals, aluminium and plastics has come down quite dramatically, almost by 50%. Sterecycle generate an income out of that so that has had an impact.

BDR was unavailable for comment when contacted by letsrecycle.com.According to Rotherham council’s website, 25% of its residual waste is sent to Sterecycle, however it may now have to find an alternative outlet for this.

Trading

Mr Hollander explained that the administrators are using the going concern form of administration for Sterecycle, which means that the company can continue to operate whilst a buyer is found. He said the administrators are in talks with the major stakeholders, including BDR, to see if they will continue to support the firm throughout this process.

He said: If we get the support from the stakeholders we can trade for about three to five weeks. If any of the stakeholders dont support us then that time will come down dramatically and we would run out of money meaning we would have to close.

He said that at the moment the suppliers and stakeholders are givingan indication of support.

If a buyer is not found in the next three to five weeks, Mr Hollander said Sterecycle would be placed into full sale administration, which could mean that the 90 staff employed by the company would lose their jobs.

He added: It is early days, but I think we can keep everything in check there is a reasonable chance of a buyer being found.

Problems

Related Links

Sterecycle

Sterecycle has faced a series of challenges at its Rotherham facility including an explosion at the site in January 2011 which saw one man die as a result of his injuries (see letsrecycle.com story).

In addition, the Environment Agency had expressed concern about the amount of time its officers had to spend dealing with odour issues at the plant. Following this, Sterecycle implemented an odour management programme in August 2012 (see letsrecycle.com story).


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