Cleanaway Waste Management has ‘cleaned’ up by agreeing to buy the collapsed Victorian recycling assets of SKM for $66 million.
SKM’s collapse earlier this year led to tonnes of Victorian recyclable materials being sent to landfill and sparked a crisis in the sector.
The news saw Cleanaway shares jump sharply in yesterday’s down market and they added 6.25% to end the day at $2.04.
Cleanaway had positioned itself to grab the assets since it acquired $60 million of SKM debt in August.
Yesterday (Wednesday) Cleanaway said it had now reached a deal for SKM’s properties, plant, equipment, and other assets.
That will include three material recovery facilities in Victoria (including the Laverton North plastic sorting facility) and a waste material recovery facility in Tasmania.
As well there are two properties in South Australia that Cleanaway says it doesn’t want and may sell.
Victoria’s recycling system was thrown into crisis when the state’s environmental watchdog ordered SKM to stop accepting waste by over safety concerns about waste stockpiles and fire risk.
Unable to operate, SKM collapsed in August with debts of more than $100 million.
“Since the appointment of receivers and managers, significant progress has been made in clearing waste stockpiles from the sites, repairing plant and equipment and bringing the sites to required safety, environmental and operational standards,” Cleanaway chief executive and managing director Vik Bansal said in yesterday’s release.
“We expect to gradually restore operations in Victoria over the coming months to provide councils with quality, sustainable solution for their recycling.”
Mr. Bansal said Cleanaway expects to keep most of SKM’s employees. A Victorian government loan of $10 million to receivers KordaMentha seems to have crucial to the clearing of stockpiles and the reopening of the key Laverton North facility.