Transpacific to buy 15% of CMA Corp after placement

Waste management company Transpacific Industries Ltd has agreed to acquire a 15 per cent shareholding in metals recycling company CMA Corporation Ltd, which has extensve Western Australian operations, for around $25 million.

Under a conditional agreement, Transpacific will be given the right to acquire 22.8 million shares, or 6.4 per cent of the company, at 48.4 cents each.

Subject to CMA shareholder approval at the company's upcoming annual meeting next month, Transpacific will also have the right to acquire approximately 27 million shares more.

Under the agreement, Transpacific has until November 7 to exercise its option to acquire the CMA stake.

Proceeds from the placement will be applied to debt reduction and to working capital.

The full text of a company announcement is pasted below

Metals recycling group CMA Corporation Limited (ASX: CMV) is pleased to announce that it has entered into a conditional option agreement under which Transpacific Industries Group Limited (ASX: TPI) could become a major strategic investor in the company.

Under the agreement, which is subject to due diligence and other conditions, TPI has the right to acquire up to 15% of the issued capital of CMA for approximately $25 million.

The proposed issue price to TPI is 48.45c per share, a 5% discount to the average of the closing price of CMA over the 3 days prior to 24 October 2007.

The agreement allows TPI to immediately acquire 22.8million shares, or a 6.43% stake in CMA, and subject to CMA shareholder approval at the company's upcoming Annual Meeting on 30 November, TPI has the right to acquire a further approximately 27million shares.

TPI is a leading provider of comprehensive waste and environmental services and transport solutions for Australia, New Zealand and parts of Asia Pacific.

In the course of its operations, it is also a collector of ferrous and non-ferrous scrap metal. The exercise of the options is also dependent upon CMA and TPI entering into an agreement under which each of the two companies will provide beneficial services to the other.

TPI posted net profit after tax and hybrid distribution of $103.1 million for the 2007 financial year and has a market capitalisation of more than $3 billion.

CMA Managing Director Peter Hatfull said the company would be delighted to welcome TPI to the register.

"TPI has been an outstanding Australian success story operating in sectors that have many similarities with CMA's markets. There are numerous significant benefits and operational synergies that this relationship will bring to CMA" said Mr Hatfull.

"We look forward to TPI becoming a strategic shareholder and exploring synergies between the two groups."

Under the agreement, TPI has until 7 November to exercise its option to acquire the CMA stake.

Proceeds from the placement will be applied to debt reduction and to working capital.