After the agreed sale of the company yesterday (see letsrecycle.com story), ownership of WRG is not expected to pass to the Spanish firm before October.
A spokesman for WRG told letsrecycle.com today that there was “no reason to imagine that anything will change” with current projects being undertaken by WRG under its new ownership.
 The brand-new Allington incinerator in Kent is part of the sale to Spanish firm FCC |
WRG submitted a planning application for a 240,000 tonne capacity incinerator in Hull at the end of June, the firm is seeking permission for an incinerator in Norwich and an extension to its incinerator in Nottingham.
The firm is also preferred bidder for a Private Finance Initiative contract with three councils in Berkshire and is one of two companies shortlisted for a long-term waste disposal contract with Cumbria county council.
The spokesman for WRG said: “The ownership does not pass to the Spanish until October, so nothing will change before then, but there's no reason to imagine anything will change even then.”
Hands
City financier Guy Hands is set to make as much as 1 billion in profit for his investment group, Terra Firma, with the announced sale of Waste Recycling Group.
Mr Hands, who left Japanese bank Nomura to form his private equity group, purchased WRG for 531 million in 2003. He then sank a further 450 million in the company – including the acquisition of the landfill assets of Shanks Group for 228 million.
The sale of the company for 1.4 billion does not include WRG's landfill gas business, likely to be sold separately later this year valued at between 200 million and 700 million.
” Our ambition is to become a European leader in the waste management sector. “
– Rafael Montes, FCC
However, the sale does include 210 million cubic metres of landfill capacity at 60 landfill sites. This is estimated to represent about 35% of consented landfill in the UK.
WRG currently handles about 15 million tonnes of domestic and industrial waste each year with its landfills and an expanding energy-from-waste incineration business.
The WRG sale will in part help Terra Firma launch a bid to move into the water sector, and the company is thought to be targeting Thames Water for an acquisition.
FCC
FCC, on the other hand, is seen as diversifying its business portfolio and expanding out of the Spanish housing market, which is seen as over-crowded and in decline.
According to the Financial Times, FCC's major shareholder Esther Koplowitz, has promised to double the company's sales by 2008 and reduce dependence on the Spanish market from 90% to 60%. Ms Koplowitz, the daughter of the firm's founder, purchased a 49% stake in the company from French utilities firm Vivendi – now Veolia Environment, the parent company of UK-based Veolia Environmental Services – in 2004.
Rafael Montes, chief executive of FCC, said yesterday: “Our ambition is to become a European leader in the waste management sector. With the acquisition of WRG, added to our leading presence in Spain, Portugal, and Central and Eastern Europe, we believe we are achieving this goal.”
Previously, FCC had only a small presence through waste firm Focsa, with around 50 million annual turnover. Its presence in the UK market was effectively barred while a majority stake was owned by Vivendi from 1998 to 2004.
It is thought by analysts that the acquisition of WRG could see FCC becoming the third largest waste management operator in Europe, though much smaller in size than Veolia or SITA.
Municipal
Among WRG's municipal activities are a 25-year contract with Hull city council, under which the company is now making another attempt to gain permission to build an incinerator. An earlier attempt to win approval was ultimately rejected by the government, but the proposal for a site at Salt End has been reduced in size.
WRG is also hoping to build a recycling and composting facility at Gallymoor, including treatment capacity for 50,000 tonnes of green and kitchen waste each year. The firm is aiming at a 45% recycling rate under its long-term contract.
Paul Tomes, WRG’s contract director for Hull and East Riding, said: “WRG’s 100 million investment in Hull and East Riding will help to deliver the facilities required to meet the 45% recycling and composting target.
“Achieving the 45+ target would place Hull and East Riding on a par with the leaders in Europe for recycling. The facilities at Salt End also have a vital role to play in reducing reliance on landfill.”
Incinerators
Elsewhere, WRG's 10 million incinerator at Allington, Kent, has just started operating this summer. The plant can handle about 500,000 tonnes of material each year under WRG's contract with the county council.
WRG is seeking to build an incinerator at the Longwater Industrial Estate near Norwich, under a 25-year deal with the county council to process 150,000 tonnes of residual waste per annum. The controversial project has already encountered strong local opposition.
The company is also aiming to expand its oldest incinerator, the Eastcroft plant at Nottingham, which was built in the 1970s, to add a third line. This would see the 150,000 tonne annual capacity expanded by a further 100,000 tonnes.
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