Shanks Group Plc, a European environmental company that provides sustainable waste management services to the public and private sectors, has agreed to sell its 50 per cent stake in Avondale Environmental Services to Landmedia, its joint venture partner.
Shanks Group Plc, a European environmental company that provides sustainable waste management services to the public and private sectors, has agreed to sell its 50 per cent stake in Avondale Environmental Services to Landmedia, its joint venture partner.
Avondale currently operates consented landfill void, generating 8MW per hour of electricity from landfill gas. The deal values the Kent-based company and a soil treatment facility at Kinneil Kerse near Falkirk at £61.8 million.
Once Shanks’s net debt has been deducted along with site restoration provisions and working capital adjustments, the international energy-from-waste company is set to receive up to £27.5 million in return for its stake.
On completion, Knutsford-based Landmedia will pay an initial £15.5 million, and a further £3 million is set to be paid on the first anniversary of the transaction. An additional £3 million is dependent upon the outcome of two applications for the development of additional void at Avondale. Landmedia expects both applications to be resolved positively this year.
The remaining £6 million will be paid over seven years, the first instalment falling on the first anniversary of completion and in equal instalments every six months.
The proceeds will be used to strengthen the group’s balance sheet. In April, Shanks announced that it would be focusing on core activities and had refinanced its £250 million bank facility for a €360 million (£313 million) loan that expires in April 2012.
As the UK landfill tax continues to rise, Shanks’s strategy will be to focus on investment opportunities in recycling and energy-from-waste projects, which it believes “will offer greater long-term return and growth prospects than those offered by landfill”. A portion of the proceeds is set to be reinvested in landfill diversion projects.
In the year to 31 March 2009, Avondale made an estimated pre-tax profit of £7.9 million, with net assets of £10.3 million.
