veolia sells us unit to highstar
Last Updated : GMT 02:32:29
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Veolia sells US unit to Highstar

Arab Today, arab today

Arab Today, arab today Veolia sells US unit to Highstar

Paris - Agencies

Veolia Environnement is selling its US waste management arm to infrastructure fund Highstar Capital for $1.9 billion, marking another step forward in the French company’s efforts to cut debt and shifting attention to the planned sale of its transport business. The deal follows the sale last month of Veolia’s majority stake in its regulated UK water business, also for around $1.9 billion. Analysts said the prices achieved in both sales were higher than expected. Debt-laden Veolia is restructuring as Chief Executive Antoine Frerot unwinds much of an expansion plan undertaken by the company’s founder and former CEO Henri Proglio. The company had debt of 14.7 billion euros at the end of last year and is aiming to sell assets worth 5 billion by the end of next year. The US waste sale will cut net debt by $1.82 billion. The deal also means 60 per cent of the disposal programme is now done, but the group’s attempts to exit its transport joint venture with French state bank Caisse des Depots (CDC), up for sale since December, could prove more tricky. “The (waste and water) assets already sold showed a lot of appetite from the market, which doesn’t seem to be the case for Veolia Transdev, the other significant asset identified by the group in its disposal programme,” CM-CIC Securities analyst Olivier Bails said in a note. A possible “positive surprise” could, however, come from a sale of Veolia’s 24.95 per cent stake in Berlinwasser, which provides water for the German capital and is 50.1 per cent state-owned, with the rest held by utility RWE, Cheuvreux analysts said. Reuters reported last week that Highstar had lined up financing and made a final offer for Veolia’s US waste business, Veolia ES Solid Waste Inc. New-York based Highstar manages more than $5.6 billion through its infrastructure funds and owns waste management businesses in the north east and south east of the United States. Its waste business has been acquiring competitors, completing 30 acquisitions since 2005, according to its website. Veolia ES Solid Waste, based in Milwaukee, Wisconsin, is one of the largest solid waste companies in the United States, with 72 collection facilities and 29 landfill facilities in North America. Veolia said it expected to complete the sale to Highstar by the end of the year, subject to approval from US competition regulators. “In the US waste business, Veolia Environnement will continue to grow its activities in hazardous waste and industrial services,” Veolia said in a statement. Highstar, the infrastructure-focused private equity firm once affiliated with American International Group Inc. (AIG), beat bids from buyout firm Madison Dearborn Partners LLC and Brazilian conglomerate Estre Ambiental SA, said people familiar with the matter prior to the announcement. Veolia is shedding the unit as it tries to cut debt by 20 per cent to 12 billion euros by the end of next year. Chief Executive Officer Antoine Frerot said last month he wants to focus on “promising” countries and will pursue asset sales in the US and UK “The transformation of Veolia is progressing as planned,” Frerot said in the statement. Veolia shares rose as much as 4 per cent to 9.58 euros in Paris. The shares traded at 9.50 euros at 9:04 a.m. local time. Barclays and Credit Suisse advised Veolia on the transaction, while Highstar was advised by Deutsche Bank and Macquarie. Veolia plans to cut operating costs by 120 million euros in 2013 and narrow its geographic reach. On June 28, Veolia sold its UK regulated-water business to Infracapital Partners for 1.2 billion pounds ($1.9 billion). The deal “will create a strong company with compelling growth prospects,” Highstar Capital Founder and Managing Partner Christopher Lee said in a separate statement. Highstar’s US waste business will operate in 20 states with annual revenue of about $1.4 billion, it said. Veolia ES Solid Waste Inc. has more than 300 locations that provide hazardous and non-hazardous waste management and industrial cleaning services, the company said on its website. Highstar already operates US waste management businesses Advanced Disposal Services Inc. and Interstate Waste Services Inc, according to the New York-based company’s website. Deutsche Bank AG and Macquarie Group Ltd. advised Highstar on the deal. From gulftoday

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