Local waste management firm Tox Free Solutions is expanding its east coast presence with the acquisition of Worth Corporation for $70 million.
Local waste management firm Tox Free Solutions is expanding its east coast presence with the acquisition of Worth Corporation for $70 million.
Tox Free will wholly acquire the NSW-based liquid waste and industrial services business, which operates a number of treatment plants and facilities in its home state.
To fund the cash purchase, Tox Free has launched an institutional placement to raise $20 million, which has been fully underwritten by Morgan Stanley.
The raising has been priced at $2.55 per share, representing a 4.4 per cent discount to Tox Free’s five-day volume weighted average price.
The company has also invited shareholders to participate in a share purchase plan at the same price as the placement, to raise a further $4 million.
Tox Free will also draw down on a syndicated debt facility to fund the acquisition.
Worth, which is expected to achieve full-year earnings before interest, tax, depreciation and amortisation of $12.9 million and revenue of $62.4 million for FY16, currently has a workforce of 130 employees, including three senior managers and 60 drivers.
The target has developed a 15,000 square metre industrial waste and chemical immobilisation treatment facility at St Marys in Sydney, which is approved by the Environmental Protection Authority for the treatment of up to 100,000 tonnes of hazardous waste.
Worth also operates an industrial services depot in Kurri Kurri (in the Hunter Valley), and on-site liquid treatment facilities at Glencore’s Tahmoor coal mine.
“Worth provides an ideal opportunity to firmly establish Tox Free in the NSW market,” Tox Free managing director Stephen Gostlow said.
“This acquisition will make Tox Free a truly national company and further diversifies our business across end-market segments, geographies and services.
“The integration of the Worth and Tox Free business in NSW will provide new opportunities for both Tox Free and Worth employees.”
Mr Gostlow said Worth’s EPA-licensed facilities would be very difficult to replicate.
“(They) will provide a strategic advantage in winning new business in both liquid and solid waste treatment,” he said.
Post-acquisition, Tox Free expects its technical and environmental services division to bring in 20 per cent of group revenue.
Industrial services will remain Tox Free’s largest division, contributing 54 per cent to group revenue.
At present, operations in NSW accounts for about 4 per cent of the company’s revenue source.
That figure is expected to grow to 16 per cent after completing the Worth acquisition.
Shares in Tox Free were unchanged at $2.60 each at 9:45am.
