3rd Feb 2016 07:59
LONDON (Alliance News) - Waste management company Shanks Group PLC Wednesday revealed it has struck a deal to sell a non-core financial asset for around GBP30.0 million as it said tough market conditions had continued to put pressure on its business, meaning it expects to miss expectations for the full year.
Shanks said it will sell all of the debt and a 49.99% equity stake in the Wakefield private finance initiative project to Equitix Ltd, the infrastructure investor. Shanks said the sale is in line with its strategy to actively manage its business portfolio and said it would retain its stake in the Wakefield project.
"This transaction is consistent with our strategy of actively managing the group's portfolio. The proceeds will be used to reduce borrowings and support our ongoing investment in infrastructure projects. It will also enhance the ability of the group to redeploy capital for accretive acquisitions or investments where accelerated growth and returns can be delivered," said Chief Executive Peter Dilnot.
The sale came as Shanks said weakness in the oil and gas market and the electricity sector has hit its business, with the sharp fall in commodity price impacting recyclate prices and pressuring offtake markets for waste recyclers.
Due to the problems, the group said its results for the year to the end of March will be slightly weaker than its previous expectations, though it remains confident on its outlook moving into its 2017 financial year.
Shanks said its Commercial unit has continued to trade in line, helped by solid volumes in the Netherlands construction and demolition segment and progress made in its Belgian operations.
Its Hazardous waste unit, though trading well, has been hit by the tough conditions in the oil and gas sector, which contributes around half the unit's revenue. Industrial cleaning activity and sludge volume weakness has offset any positive contribution from its soil, pyro and waterside ship treatment work.
The Municipal unit has also struggled, though this has been somewhat offset by its contracts in Barnsley, Doncaster and Rotherham and in Wakefield entering full service.
By Sam Unsted; [email protected]; @SamUAtAlliance
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