Shanks Group today (October 5) increased the odds on it significantly expanding its share of major UK waste management contracts with the acquisition of the UK waste private finance inititiative interests of United Utilities. But, it will only pay for the involvement once tenders or preferred bidder stages move to signed contracts.
Shanks revealed that it is taking United Utilities´ place on all of its existing bids. The move is assumed to confirm the exit from the waste market of United Utilities which is mainly involved in the provision of water, sewerage and gas services. To date, United Utilities was still to get off the ground in a positive way in the waste management sector although it is still a contender for significant contracts.
This acquisition represents an important step forward in the roll-out of our PFI strategy
Tom Drury, Shanks
In a statement released this morning Shanks said it “has acquired the UK waste PFI interests of United Utilities (UU), strengthening its position as one of the country's leading operators of municipal waste contracts”.
The company added: “Shanks will take UU's place on all of its existing bids including preferred bidder for a PPP municipal solid waste (MSW) treatment contract for both Derbyshire county and Derby city councils and short-list positions at Leicester[shire], Derry and Gloucester[shire]. Other than a small initial payment any consideration will be contingent upon the successful financial closure of individual projects and payable from win fees.”
Tom Drury, group chief executive of Shanks, commented: “This acquisition represents an important step forward in the roll-out of our PFI strategy, increasing our pipeline of opportunities and bringing us closer to our next full award as Preferred Bidder for Derbyshire. The sale of the PFI equity stakes and the addition of UU's PFI waste business simplifies our PFI business and strengthens our position as one of the leading operators in the UK PFI waste market.”
Staff from United Utilities are also to join Shanks as well as commercial resources from “strengthening and complementing Shanks` existing resources to enable it to deliver on its increased pipeline of PFI opportunities”.
MBT
The bids will principally employ Mechanical Biological Treatment (MBT) alongside gasification processes for thermal treatment of waste, and will complement Shanks' own MBT technology platform.
On 30 September, Shanks announced it had sold all of the subordinated debt and 80% of the equity in the East London Waste Authority (ELWA) and Dumfries & Galloway (D&G) PFI contracts to John Laing Investments. Shanks confirmed it will retain the long term operating contracts for both ELWA and D&G (see letsrecycle.com story).
Only recently, United Utilities lost a place on the bid list for the South London Waste Partnership which is likely to be disappointing for Shanks, although this happened ahead of today´s announcement (see letsrecycle.com story).
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