Waste firm Biffa prepares for lenders’ judgement on future

Michael Bow
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CREDITORS of bin collector Biffa, which employs around 6,000 bin workers in the UK, could seize control of the firm as the company struggles to pay back £1.1bn of loans to mezzanine and senior debt lenders.

A consortium of about 50 senior lenders, led by HSBC, are understood to be looking at taking control of Biffa, which owes around £820m to its senior creditors.

Lenders had already agreed to waive covenant tests on the firm’s loans until this month, ahead of an interest payment due on the company’s £280m of mezzanine loans. It is thought that the mezzanine lenders are mulling a proposal to convert their debt into equity.

The firm is controlled by Wasteinvestments, a limited partnership set up by Montagu Private Equity and Global Infrastructure Partners.

It has been undergoing restructuring talks with parties after coming under financial pressure from reduced waste volumes.

A Biffa spokesman said last night: “Biffa is a profitable, cash generative business.

“The company is undertaking a well-managed, professional restructuring process, working with lenders to reduce debts on the business.”

The firm’s accounts for 2010- 2011 show revenues up to £775.1m from £701.9m a year previously. However, the firm still lost £156.5m before tax and after exceptional costs.

The firm, which started life over a century ago as a haulage business for the collection of ash and dust from coal power stations in London, listed on the London Stock Exchange in October 2006.

In April 2008, the firm was taken private by a consortium of Montagu, GIP and Uberior Co-Investment in a highly-leveraged £1.7bn takeover.

At the start of August, a consortium including Chinook Urban Mining and JP Morgan is understood to have made a £520m cash offer for Biffa.