KKR invests in Oz recycling company

The investment was made from KKR’s $15 billion Asset Management unit, which initially invested in CMA in March, making the recent capital injection its second of the year.

In all, KKR’s investment is part of a restructuring proposal announced by CMA, and is still subject to approval by CMA’s shareholders. Should it be realized, KKR will control the between 71% and 85.5% of the company, CMA announced in a statement.
CMA’s main business deals in the

recycling and processing of secondary ferrous and nonferrous metal products at its facilities in Australia, New Zealand, Singapore, Malaysia, Papua New Guinea and the US. Its products are supplied to the metal recycling market worldwide.

While opportunities surrounding the global recycling industry has been robust, CMA has encountered its share of fiscal problems, and in February 2010 the company announced that it would voluntarily suspend the trading of its shares in order to restructure its finance facilities and explore ways to raise capital. Fast forward a year and KKR may now be in a position to provide the capital necessary to reinvigorate CMA’s business.

A restructuring plan is currently being reviewed by CMA’s shareholders, and if approved, KKR will provide equity and capital commitments that will be used to refinance CMA’s existing debt facilities, according to the companies. These movements come as part of the CMA’s wider comprehensive recapitalization plan.

“We see great potential in CMA and are excited by the prospect of assisting in enhancing the Company’s capital structure,” Jamie Weinstein, Co-head of KKR’s Special Situations group, said in a statement. “Working with management, we intend to grow the business over the long term.”
He added that the recapitalization will provide the company with the financial security necessary to improve its recycling operations and sustain its 450 staff.
The deal comes for years after KKR A$1.83 billion made its first cash acquisition in Australian, in Brambles’ waste management business. That transaction was actually KKR’s first investment in the market, and represented the largest management buyout ever in that market at that time.

The Australian Cleantech, a consulting and advisory firm, predicted in its Cleantech Review that Asian investors are poised to flood the market in 2011, following a blockbuster 2010 that saw 91 cleantech-related companies in South Australia make their public debuts. These companies – with CMA among them - saw nearly A$1.2 billion ($1.3 billion) in revenues last year. In 2009, the state attracted $95.3 million in total investment, according to the report. 

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• Topics
• Australasia
• Industrials
• Restructuring
• KKR