Warburg Pincus completes $540m exit from Australia's Transpacific

According to a regulatory filing, the private equity firm sold its entire 33.9% stake at A$1.05 per share, a 6.7% discount to the previous closing price.

The move came as Transpacific announced plans to divest its New Zealand waste management business in order to further pay down debt and focus on growth opportunities in Australia. The company has also refinanced A$290 million of syndicated facilities due to mature in November 2014, reducing its overall debt burden from A$1.4 billion to A$1.2 billion.

Transpacific specializes in recycling, waste management and industrial services, working with a wide range of multinational commercial and industrial groups. It has more than 300 sites and depots in Australia and New Zealand, including 50 technical treatment and processing plants and 45 resource recovery, recycling and baling facilities.

Warburg Pincus' investment - its first in Australia - came in June 2009, when Transpacific was struggling to service its debts. As of year-end 2008, the company had liabilities of A$2.7 billion, up from A$763.7 million six months earlier, including a A$2.1 billion syndicated finance facility.

These debts were accumulated through a number of strategic acquisitions in Australia and New Zealand, such as Cleanaway, which was bought from KKR in 2007 for A$1.25 billion. The private equity firm purchased the asset barely a year earlier alongside a mining services unit as part of a carve-out from Brambles.

Warburg Pincus became a cornerstone investor in Transpacific as the company launched an A$800 million recapitalization plan. The private equity firm bought 35.8 million shares at A$1.80 apiece for a consideration of A$64.5 million. It also received warrants that would convert into 71.6 million shares at A$1.20 apiece, for an overall investment of up to A$496 million.

Warburg Pincus subsequently participated in a rights issue in 2011, putting its total commitment to Transpacific at A$521.5 million, Reuters reported.

The company posted a net loss of A$200.4 million for the 2013 fiscal year, compared to a profit of A$32.2 million for 2012. Revenues were reasonably flat at A$2.3 billion but there was a substantial increase in non-cash impairments linked to the proposed sale or closure of non-core or underperforming assets and weaker performance from Cleanaway.

Earlier this year, Ironbridge Capital sold EnviroWaste, New Zealand's second-largest waste services business, to Hong Kong's Cheung Kong Infrastructure Holdings for NZ$490 million ($412 million). It acquired the company from Fulton Hogan in early 2007 for NZ$259 million.

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• Topics
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