LONDON Nov 29 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
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
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.