The US gasification specialist behind the development of a large shredder residue plant in the West Midlands is part of a consortium which has made a bid to acquire Biffa.
Chinook Urban Mining, part of the New Jersey-based Chinook Sciences group, has put in a joint 520 million cash offer for Biffa in partnership with private equityfirms includingClearbrook Capital.
Details of the bid first emerged in the Guardian newspaper last night (August 7)and although no confirmation has officially come from Biffas owners, city sources told letsrecycle.com that the deal is being seen as real and ongoing.
Chinook Sciences started building an end of life vehicle post-shredder residue plant in Oldbury in June 2012 as part of a joint venture with metal recycler EMR. The 350,000-tonne-a-year capacity facility will use Chinooks patented RODECs gasification and recycling technology to produce 40Mwh of electricity and recover recyclables (see letsrecycle.com story). Chinook Sciences is also developing an ‘end stage recycling facility at its UK headquarters, in Nottingham.
Biffa provides collection, treatment, recycling and disposal services across the municipal and commercial sectors and is one of the largest waste management companies in the UK.
Sale
Biffas private equity owners, Montagu and Global Infrastructure Partners (GIP), each own 50% of the equity in the Biffa Group, but this was written down to zero last year and they have been under pressure to pay back 1.1billion in loans. Therefore, the decision over a possible sale is now in the hands of the companys creditors.
During the negotiations it is thought that some of Biffas recycling activities could be sold off separately. There is a strong likelihood that the Biffa Redcar plant could attract interest from other plastics recyclers.
The 520 million cash offer is reported to have been submitted last week to PricewaterhouseCoopers (PwC), the advisers to the numerous banks that lent funds to Montagu and GIP.
Future
Biffa has been struggling financially since the private equity firms acquired the company for 1.2bn in 2008 and its owners have written off their investment. One issue for the future is its landfill liability from its closed and existing sites.
Chinook is expected to use gasification facilities totreat waste which would otherwise go to landfill to generate energy.
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In Biffa’s 2011/12 Mid Year report, published in December 2011, Biffa chief executive Ian Wakelin acknowledged that the company was experiencing economically difficult and challenging times with no discernible sign of improvement.
The interested consortium is thought to believe that it can make Biffa profitable again by converting waste into energy. On the Chinook Sciences website, the company states that its unique technology enables us to achieve profitability where others have failed.
The bidders and owners were not available for comment when contacted by letsrecycle.com.
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