Transpacific secures $800m 'rescue package'

Transpacific enters "conditional agreement" with private equity firm to inject $800 million into the business

Nearly four months since it halted trading on the ASX, Transpacific has entered into a "conditional agreement" with a private equity firm to inject $800 million into the waste management company.

WP Holdings, an affiliate of global private equity firm Warburg Pincus (WP), will commit the funds in return for an 18 percent stake in the Queensland firm.

In an announcement to the Australian Stock Exchange, Transpacific Executive Chairman Terry Peabody says the agreement will mean a return to the strong position his company held during the boom years.

"They [WP] have a strong history of successfully partnering with growth-orientated companies and their proposed participation in the recapitalisation of the company will enable Transpacific to re-affirm its position as the leading waste management services company in Australasia," he says.

Transpacific, which had a gearing ratio of 60 percent at the end of 2008, will look to retire debt and terminate "out of the money" interest rate swaps with the net proceeds of the equity raised from the deal.

Peabody, who has a number of other business interests away from Transpacific, will also come to the table, having pledged $70 million to raise additional equity from one of these firms.

WP Managing Director Rajiv Ghatalia says the decision to come to Transpacific’s aid was based on the strong business foundations at the company.

"We have been impressed with Transpacific’s platform, underlying business and management team and we believe that the re-capitalisation will provide Transpacific with a solid foundation for growth," Ghatalia says.

Transpacific shares will remain suspended for up six weeks until completion of the institutional component of the entitlement offer.

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