Debt-heavy Biffa considers ‘serious’ £520m cash bid
A consortium has made a £520m cash offer for waste management firm Biffa, which has been trying to sell off certain divisions of its business to reduce debts of over £1bn.
According to media reports released today, Biffa’s private equity owners Montagu Private Equity and Global Infrastructure Partners (GIP) have received a bid from a consortium including London recycling specialist Chinook Urban Mining and US bank JP Morgan.
“This is a serious offer and the only firm bid on the table, but some of the bankers appear to be blocking it and it is difficult to get a consensus among so many banks,” said a source close to the negotiations.
The consortium is understood to believe that they can restore Biffa to profitability by repositioning its business to concentrate more on energy from waste.
Biffa is one of the largest landfill operators in the UK and has a heavy presence in the commercial waste market, but with landfill tax rising and trade waste volumes falling, it has been under pressure to maintain revenue streams.
According to The Guardian, the cash offer was submitted last week to PricewaterhouseCoopers (PwC), adviser to the 76 banks and financial institutions that lent funds to Biffa’s current owners. The lenders have formed a steering committee comprising HSBC, GE Capital, Dexia and Prudential M&G to consider the approach.
In the year to April 2011, the group made a pre-tax loss of £127.5m on revenues of £775.1m.
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