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  4. Sale of Renewi Canada Sale of Renewi Canada

Sale of Renewi Canada

17 June 2019

Renewi plc (LSE: RWI) is pleased to announce that it has reached a binding agreement to sell its Canadian operations (“Renewi Canada”) to Convent Capital (“Convent”), an independent, sustainability-focused, Dutch investment firm based in Amsterdam, for an enterprise value of up to CAD 107.5m (approximately €72m) (the “Transaction”).

Upon completion, Renewi will receive initial cash consideration of approximately CAD 84m (approximately €56m, £50m1)2. Following completion, Convent will, with the assistance of Renewi, seek additional project financing for Renewi Canada’s operations, the successful execution of which will result in further consideration payable to Renewi up to a maximum of CAD 17.5m (approximately €12m, £10m1).

The enterprise value of CAD 107.5m (approximately €72m, £64m1) includes deferred consideration, debt-like items and capex adjustments. Immediately following completion, receipt of the initial consideration, less transaction costs, is expected to reduce the Group’s net debt to EBITDA ratio by approximately 0.23x.3,4

Completion, which is subject to change of control approvals from relevant municipalities in Canada, is expected to take place before the end of September 2019.

Commenting on the disposal, Otto de Bont, Chief Executive Officer, said:

“Today’s announcement delivers on our commitment to simplify our business and strengthen the balance sheet, achieving a fair value for our Canadian business. Convent is already present in Canada and we believe Convent will be a good owner for our customers and employees in Canada.”

Notes and additional disclosures

  1. Based on CAD/EUR exchange rate of 1.5006 and CAD/GBP exchange rate of 1.6855.
  2. Subject to normalised working capital and other customary adjustments at closing.
  3. In the Group’s financial statements for the year ended 31 March 2019, Renewi Canada was reported as a discontinued operation with gross assets of €67.5m. The Group’s reported financial results for the year ended 31 March 2019 included €18.3m in revenue, and €1.5m in operating profit from Renewi Canada. Non-IFRS notional EBITDA contribution for the equivalent period was €4.6m, comprising €3.9m from the operating business, and €0.7m of income from Renewi Canada’s SPV financial asset.
  4. The extent to which the Group’s accounts recognise / provide for the additional consideration of up to CAD 17.5m and a further receipt of an insurance recovery related to the construction of Surrey will be determined, at the time of those accounts, based on a prudent assessment of the likelihood of such consideration being received by the Group. The Group will be minded not to recognise deferred consideration until there is greater certainty of receipt. Dependent on this assessment, the Group will likely initially record a loss on disposal of up to €12m which may ultimately become a smaller loss or a small gain depending upon further monies received.