8 April 2009
VIRIDOR ACHIEVES FINANCIAL CLOSE FOR GREATER MANCHESTER PFI WASTE CONTRACT
- The UK's largest ever combined waste and renewable energy project, managing 1.3 million tonnes of waste per year
- Total potential energy generation approaching 130 MW
- Confirms Viridor's position as one of the UK's leading waste management and renewable energy companies
- Total PFI construction cost of £405m and an additional £235m for the associated energy from waste plant at Runcorn
- Viridor investing £85m plus further possible mezzanine debt of up to £40m in 2010.
Pennon Group Plc (Pennon) is very pleased to announce that Viridor Laing (Greater Manchester) Limited (VLGM), the joint venture between Pennon subsidiary Viridor Waste Management Limited (Viridor) and John Laing Investments Limited (John Laing), has achieved financial close for the PFI Waste Contract with the Greater Manchester Waste Disposal Authority (GMWDA).
In parallel, Viridor and John Laing also entered into a joint venture with Ineos Chlor Limited (Ineos) to form Ineos Runcorn (TPS) Limited (TPSCo) to build the associated energy from waste (EfW) combined heat and power (CHP) plant, the first of two phases planned for the site. In addition, Viridor entered into a further agreement with Ineos to develop the second phase of the EfW/CHP plant which will be targeted at the north west waste market more generally.
Colin Drummond, Chief Executive of Viridor said, 'This iconic project is a very important component of the UK's waste management and renewable energy strategies. It is designed to bring world class recycling, waste management and renewable energy infrastructure to Greater Manchester. It is a concrete example of major investment in the green economy and will be a showcase of what the UK can offer. This project represents a key milestone in the delivery of the Pennon Group strategy and confirms Viridor's position as one of the UK's leading waste management and renewable energy companies. I would like to thank all parties involved in bringing it to a successful conclusion.'
VLGM was selected as preferred bidder for the PFI contract in January 2007. The contract relates to 1.3 million tonnes p.a. of waste and is designed to achieve at least 50% recycling levels and 75% landfill diversion. It involves the provision of integrated waste management solutions including recycling services, composting, mechanical biological treatment and anaerobic digestion. Total construction costs are around £405m.
Viridor will assume the existing operations, comprising a network of recycling and waste transfer facilities and a 120,000 tonnes, 9 Megawatt (MW) EfW facility in Bolton, through the acquisition from GMWDA of Greater Manchester Waste Limited. The acquired company, which will be renamed Viridor Waste (Greater Manchester) Limited (VWGM), had a profit before tax of £4.6m, gross assets of £46m and net assets of £34m in the financial year ending 31 March 2008. Since then the company has been restructured in advance of this transaction.
VLGM will deliver new and improved facilities including five new mechanical biological treatment facilities, four new anaerobic digestion plants (with 8 MW of renewable energy generation capacity), four new in-vessel composting plants and a new materials recycling facility working alongside new and upgraded household waste recycling centres. These facilities will be operated by VWGM.
Solid recovered fuel produced from the waste will be used to generate electricity and provide process heat at the proposed EfW/CHP plant on the Ineos site in Runcorn, Cheshire, which achieved planning permission in September 2008. Construction costs on the first phase EfW/CHP plant will be around £235m.
The total phased investment by Pennon/Viridor in the transactions by way of equity subscriptions, purchases and shareholder debt is £85m plus further possible mezzanine debt of up to £40m in 2010.
Viridor will contribute £31m by way of equity and subordinated debt to VLGM and has a 50% shareholding interest. The balance of the funding required for VLGM will come from John Laing and from non recourse debt from a variety of sources including mezzanine debt of up to £40m from Pennon/Viridor, if required, in 2010.
Viridor will contribute by way of equity and subordinated debt £19m to TPSCo and has a 20% shareholding in this joint venture. In respect of the further agreement between Viridor and Ineos regarding the second phase EfW/CHP plant, Viridor has secured full development rights for the plant and has agreed to invest £35m to fund advanced and shared works on the two phases of the plant. The two phases are expected to have an aggregate capacity of 750 thousand tonnes of solid recovered fuel and generate around 120MW of electricity and heat.
A conference call for analysts and investors with Colin Drummond, Executive Director of Pennon Group and Chief Executive of Viridor and David Dupont, Group Director of Finance of Pennon Group, will be held today at 5.00 pm.
Dial in number: +44(0)207 162 0025; Conference id: 821381.
For further information please contact:
Colin Drummond, Executive Director of Pennon Group and Chief Executive of Viridor, on 01823 721435.
James Murgatroyd and Sally Hogan, Finsbury on 020 7251 3801