Waste group Biffa agrees debt for equity swap with lenders group

Published on 01/12/2012 00:00

Waste collection company Biffa has agreed a deal that will see its lenders seize control of the debt-laden firm.

In return for a majority stake, lenders Angelo Gordon, Avenue Capital, Babson Capital Europe and Sankaty Advisors will invest £75 million in cash and more than halve the firm’s £1.1 billion debt pile to £520m.

Chief executive Ian Wakelin said the deal would bring stability for the company, which employs more than 6,000 people and has a turnover of around £1bn.

He added: “The recapitalisation will provide the company with significant new investment, bring long-term financial stability to Biffa, and provide an excellent platform to develop the business.”

Biffa was saddled with large loans when it was taken over by three investment firms – Montagu, Global Infrastructure Partners and the private equity arm of HBOS – for £1.7bn in 2008. The waste industry has suffered from the economic downturn and increasing taxes for landfill, and the group plans to invest in more recycling and waste recovery facilities.

The firm, founded more than 100 years ago, started life as a haulage business collecting ash from coal-fired power stations in London. It became part of the Severn Trent group in 1991 before being spun out of the water utility in 2006.

Based in Buckinghamshire, it collects around four million tonnes of waste a year from around 75,000 industrial and commercial customers and one million households.

Biffa said the debt-for-equity swap plans had the support of a “substantial majority” of its lenders and it hopes to complete the deal early next year.