NZ sale cuts debt for waste company
Australian waste management business Transpacific Industries made a A$41 million (NZ$45.4m) gain on the sale of its New Zealand waste business, its annual results say.
But the gain has been made after Transpacific wrote down the value of the New Zealand business in 2011 by A$182m.
The big Queensland headquartered group made headlines in March with the sale of the New Zealand business to a subsidiary of state-owned Beijing Capital Group for NZ$950m.
Other bidders such as Infratil expressed surprise at the price paid by the Chinese company.
The sale was eight years after Waste Management New Zealand sold the business to Transpacific in 2006 for NZ$870m.
Former Waste Management managing director Kim Ellis said in March that the Chinese secured the company for quite a discount.
Transpacific had not only spent NZ$870m on Waste Management New Zealand but another NZ$90m on most of the South Island assets of EnviroWaste. Its then boss Terry Peabody "tipped in" anything up to NZ$100 million of industrial and liquid waste management businesses he had in New Zealand into the New Zealand business.
So Transpacific spent more like NZ$1.2b to establish the New Zealand business rather than NZ$870m, Ellis said.
Yesterday Transpacific reported a statutory profit of A$11.5m for the June 2014 year, compared to a A$218.7m loss in the previous year.
It resumed dividends after not paying any since 2008 and committed to a policy of paying regular dividends of 50 per cent to 75 per cent of underlying net profit. An A1.5c a share fully taxed dividend would be paid on October 8, the company said.
In the June 2014 year Transpacific also sold its commercial vehicles business for A$219m, and other assets and properties brought in A$32m, with the proceeds from those and the New Zealand sale used to pay down debt.
Debt dropped from A$978m last year to a net cash position of A$137m at June 30. After it redeemed the "step-up preference securities" in September, it would have net debt of about A$115m, the company said.
The June 2014 year profit was earned on revenue of A$1.89 billion of which NZ$433m came from the New Zealand business. The sale to the Chinese was settled on June 30.
The profit was hit by a A$189m after-tax charge related to landfill rectification and remediation provisions. That was mainly offset by the gains from the sale of its commercial vehicle business (A$131m) and its New Zealand waste management business (A$41.1m). The company said the underlying net profit was A$92m, 35 per cent higher than in the June 2013 year.
Chairman Martin Hudson said excellent progress had been made on strengthening the balance sheet since the board appointed Bob Boucher as chief executive last October. The company now had a clear strategy, a strong cash position, improved debt facilities and lower interest expense, allowing the company to pursue strategic growth opportunities, Hudson said.