RLPC-Biffa restructuring sees 1.1 bln stg debt halved

LONDON Thu Nov 29, 2012 12:58pm EST

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LONDON Nov 29 (Reuters) - Lenders to UK waste management firm Biffa will take the keys from its private equity owners in a restructuring that will cut its 1.1 billion pound ($1.8 billion) debt pile by 55 percent.

Montagu Private Equity and Global Infrastructure Partners (GIP), which bought Biffa in 2008, backed by 1.1 billion pounds of debt, unsuccessfully tried to sell the business this year.

As part of the restructuring, Biffa's existing debt will be reduced to 520 million pounds, the company said on Thursday.

Biffa's new shareholders - Angelo Gordon & Co, Avenue Capital Group, Babson Capital Europe and Sankaty Advisors - will inject 75 million pounds of super senior debt into the company. Once the restructuring is complete, the new shareholders will become the majority shareholders.

The 75 million pounds will be used to fund a new infrastructure programme designed to reinforce Biffa's position in collection, recycling and technology-led waste recovery, the company said.

As part of the restructuring, mezzanine lenders will see their 280 million pounds of debt in Biffa wiped out through a scheme of arrangement in the UK courts, which will be launched at the end of the year and completed by early 2013, sources said.

Biffa's mezzanine debt is basically worthless and was quoted at 0.6 percent of face value on Thursday, according to Thomson Reuters LPC data.

Meanwhile, senior lenders to Biffa, which have 820 million pounds of debt invested in the company, will write off 300 million pounds of it in a debt-for-equity swap.

Montagu and GIP bought Biffa before the collapse of Lehman Brothers and the ensuing credit crisis. But as with many businesses reliant on British public sector contracts, what was meant to be a resilient source of long-term business became a handicap as government and local authorities reined in spending.

Biffa is also heavily exposed to industrial contracts, which have shrunk as businesses have produced less waste.

In an attempt to increase its capacity to handle recycling, Biffa acquired smaller rival Greenstar in 2010. Biffa recently claimed several major business wins, including an agreement to implement and manage a new recycling system for Odeon Cinemas.

Biffa is one of the UK's leading industrial and commercial waste collectors, collecting 3.3 million tonnes of waste from about 75,000 customers.

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