Cleanaway Waste Management Ltd. · ASX:CWY
Cleanaway Waste Management — Merger or Acquisition (August 2022)
45 slides from Cleanaway Waste Management's merger presentation, Aug 19, 2022
Slide 1: Acquisition of GRL and Equity Raising
Cleanaway Waste Management Limited Australia’s leading total waste Acquisition of GRL and Equity Raising management services provider 19 August 2022 Not for release to US wire services or distribution in the United States
Slide 2: Important notice and disclaimer
This investor presentation (Presentation) is dated 19 August 2022 and has been prepared by Cleanaway Waste Management Limited (ABN 74 101 155 220) (Cleanaway). By attending an investor presentation or briefing, or accepting, accessing or reviewing this Presentation, you acknowledge and agree to the
Slide 3: Important notice: offer restrictions and investment risk
The distribution of this Presentation in jurisdictions outside Australia may be restricted by law and you should observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. In particular, this Presentation may not be released
Slide 4: Past performance and forward-looking statements
Past performance Past performance, including past share price performance of Cleanaway and pro forma financial information given in this Presentation, is given for illustrative purposes only and should not be relied upon as (and is not) an indication of Cleanaway’s views on its future financial perf
Slide 5: Disclaimer
Disclaimer The Lead Manager is acting as lead manager, bookrunner and underwriter to the Placement. A summary of the key terms of the underwriting agreement between Cleanaway and the Lead Manager is provided in Appendix C. The Lead Manager is acting for and providing services to Cleanaway in relatio
Slide 6: Agenda
1. Transaction Overview 2. The Opportunity 3. GRL Overview 4. Equity Raising Overview 5. Conclusion Appendices A. Glossary B. Key risks C. Summary of placement agreement D. Foreign selling restrictions Not for release to US wire services or distribution in the United States
Slide 7: Transaction Overview
Transaction Overview Not for release to US wire services or distribution in the United States
Slide 8: Transaction overview
• Cleanaway Waste Management Limited (“Cleanaway”) is today launching a $350m fully underwritten Institutional Placement (“Placement”) and a $50m non-underwritten Share Purchase Plan (“SPP”) (together, the “Equity Raising”) to provide significant balance sheet capacity to fund Cleanaway’s BluePrint
Slide 9: Clear plan to execute on BluePrint 2030
• Our plan is to operate two strategically located sites to provide Sydney-wide processing capability for organics ‒ GRL’s licensed large-scale organic composting infrastructure is in a strategic location Clear plan to ‒ We plan to develop enclosed FOGO composting infrastructure at the existing Luca
Slide 10: Acquisition rationale for Cleanaway
Accelerates Cleanaway’s BluePrint 2030 organics strategy by providing high circularity, low-carbon 1 solutions for ‘Red bin’ household waste today and FOGO bin organic waste as Council customers transition to this solution Cleanaway is the logical owner of GRL as we are the exclusive provider of was
Slide 11: Strategic Infrastructure Growth and Sustainable Customer Solutions
Strategic Infrastructure Growth Sustainable Customer Solutions 1 Energy from Waste 7 Leadership in Carbon & Circularity • Unlocks Kemps Creek for potential development into a C&D 2 C&D resource recovery facility • Potential for significant synergies between C&D and the Kemps Creek inert landfill 3 O
Slide 12: Equity Raising and operating cash flows provide capacity to fund growth
Equity Raising and strong operating cash flows provide appropriate capacity to fund additional growth opportunities • Equity Raising provides significant balance sheet capacity to fund Net debt to underlying EBITDA1 additional growth opportunities to deliver the blueprints under the We remain commit
Slide 13: The Opportunity
The Opportunity Not for release to US wire services or distribution in the United States
Slide 14: Greater source separation will lead to higher resource recovery and more FOGO volumes
Greater source separation will lead to higher resource recovery and more FOGO bin volumes Mixed recycling Mixed recycling • Customer demand and government policy are driving a shift to greater resource recovery and diversion from landfill • Food organics and garden organics separation is ‘Yellow bin
Slide 15: Acquisition of GRL puts Cleanaway at the forefront of the FOGO bin transition
Acquisition of GRL puts Cleanaway at the forefront of the FOGO bin transition Indicative transition of Sydney metro Councils to • Only a few Councils currently offer FOGO collections and FOGO bins to increase resource recovery levels volumes are a small part of the overall market • As existing contr
Slide 16: Cleanaway's infrastructure network will provide comprehensive coverage across waste types
Cleanaway’s infrastructure network will provide comprehensive coverage across waste types Western Sydney MRF (under construction) GRL The acquisition of GRL combined with the planned development of a new organics facility at Lucas Heights and Erskine Park our leading transfer station network provide
Slide 17: GRL Overview
GRL Overview Not for release to US wire services or distribution in the United States
Slide 18: NSW EPA licensed large-scale organics composting facility
NSW Environment Protection Agency (“EPA”) licensed large-scale organics composting facility Background on GRL Location and site overview • Licensed large-scale organics composting facility that processes 220kT p.a. or ~20% of Sydney’s mixed household waste • Highly experienced management team with d
Slide 19: Leading landfill diversion and better carbon outcomes for Council customers
Leading landfill diversion and better carbon outcomes for Council customers • A change in EPA policy from 2018 has meant that the compost from GRL, which comes from Red bin Waste, can no longer be used in land applications1 What is the policy? • Under NSW Government policy, households and certain C&
Slide 20: Currently composts Red bin waste and will transition to FOGO bin organic waste
Currently composts organics from Red bin household waste and will gradually transition to FOGO bin organic waste to meet Council customer needs 1 1 Waste receival area 2 2 Pre-sort area 3 5 4 Composting hall 3 4 Expected upgrade of $40-45m to enclose the Maturation compost maturation area 5 Odour co
Slide 21: Strong EBITDA and cash flow supported by large scale operations
Strong EBITDA and cash flow supported by large scale operations 40 EBITDA ($m) 35 30.6 30 27.8 28.6 28.6 • GRL is expected to contribute a pro forma EBITDA of 1.4 ~$21.4m which reflects: 5.9 – GRL’s Reported EBITDA1 of ~$28.6m; less 25 20 – Cleanaway’s ~$5.9m annualised loss on the GRL unfavourable
Slide 22: Equity Raising Overview
Equity Raising Overview Not for release to US wire services or distribution in the United States
Slide 23: Offer size, structure and underwriting; placement pricing
• Fully underwritten institutional placement to eligible institutional investors to raise approximately $350m Offer size, structure • Issue of approximately 140.0 million New Shares under the Placement, representing approximately 6.8% of Cleanaway’s and underwriting ordinary shares on issue • Non-un
Slide 24: Sources and Uses
Sources1 $m Uses1 $m Gross proceeds from Placement 350.0 Acquisition of GRL2 166.6 Placement and acquisition costs3 8.8 Balance sheet capacity4 174.6 Total sources of funds 350.0 Total uses of funds 350.0 • Significant balance sheet capacity to fund additional growth opportunities • These include in
Slide 25: Pro forma balance sheet
Placement & Pro forma $m Cleanaway1 Acquisition of GRL3, 4 Settlement of Debt2 30 June 2022 Cash & cash equivalents 66.5 169.4 (169.4) 66.5 Right-of-use assets 614.7 - - 614.7 Property, plant & equipment 1,434.5 - 19.8 1,454.3 Intangible assets 3,074.3 - 65.6 3,139.9 Other assets 672.8 1.8 12.8 687.
Slide 26: Pro forma financial results
Pro forma $m Cleanaway1 GRL2 Adjustments3 % Change 30 Jun 2022 Gross Revenue 3,006.2 58.4 (24.5) 3,040.1 1.1% Net Revenue 2,603.8 58.4 (24.5) 2,637.7 1.3% Underlying EBITDA 581.6 27.2 (5.9) 603.0 3.7% EBITDA margin 22.3% 46.6% 22.9% - Underlying EBIT 257.1 23.9 (5.9) 275.2 7.0% EBIT margin 9.9% 40.9
Slide 27: Key dates and milestones
Milestone Date1 7:00pm (AEST), Record date for SPP 18 August 2022 Trading halt and announcement of Acquisition, Placement and SPP 19 August 2022 Placement bookbuild 19 August 2022 Trading halt lifted – trading resumes on ASX 22 August 2022 SPP offer opens 22 August 2022 Settlement of New Shares issu
Slide 28: Conclusion
Conclusion Not for release to US wire services or distribution in the United States
Slide 29: Conclusion: Equity Raising provides balance sheet capacity to fund growth
Equity Raising provides significant balance sheet capacity to fund additional growth opportunities, 1 that will deliver on BluePrint 2030, starting with the acquisition of a 100% interest in GRL for $168.5m The acquisition accelerates Cleanaway’s BluePrint 2030 organics strategy by providing high ci
Slide 30: Appendix
Appendix Not for release to US wire services or distribution in the United States
Slide 31: Glossary
Term Definition C&D Construction and demolition C&I Commercial and industrial EBITDA Earnings before interest, taxes, depreciation and amortisation EfW Energy from Waste EPA Environment Protection Agency FOGO Food organics and garden organics GRL Global Renewables Holdings Pty Ltd MRF Material Recov
Slide 32: Key risks: Overview
1. Overview This section discusses some of the key risks associated with any investment in Cleanaway, which may affect the value of Cleanaway shares. The risks set out below are not necessarily listed in order of importance and do not constitute an exhaustive list of all risks involved with an inves
Slide 33: Risks relating to the Acquisition
Topic Description Following completion of the Acquisition, Cleanaway will be responsible for any outstanding liabilities that GRL has incurred prior to the Acquisition, including any liabilities that were not identified Cleanaway will assume during Cleanaway’s due diligence or which are greater than
Slide 34: Risks relating to Cleanaway and its business
3. Risks relating to Cleanaway and its business While the risks set out in this section are stated to relate to Cleanaway and its business, investors should consider that some or all of these risks will also apply to GRL and its business, which Cleanaway will own following completion of the Acquisit
Slide 35: Environmental regulation risk
Topic Description An increase in the community’s environmental awareness and expectations of operations in the waste management industry may have the effect of increasing environmental laws and regulations or the severity of penalties for non-compliance, and increase the risk of non-compliance. Chan
Slide 36: Climate and sustainability risk
Topic Description As Cleanaway and the global economy move to decarbonise and adapt in response to the risk of climate change, Cleanaway is exposed to physical and transitional risks which may require Cleanaway is exposed to Cleanaway to incur more expenditure than anticipated or reduce demand for C
Slide 37: Key customers and legal claims risk
Topic Description Cleanaway relies on key In addition to new customers or contracts, Cleanaway may also seek to increase its prices for its existing customers or under existing contracts. Cleanaway’s future financial performance may be customers (cont’d) materially impacted by Cleanaway’s ability to
Slide 38: Acquisition benefits risk
Topic Description While Cleanaway has and will conduct due diligence enquiries in relation to any past and future acquisitions, it is possible that one or more material issues or liabilities may not have been or may Cleanaway may not not be identified, or are of an amount that is greater than expect
Slide 39: Technology risk
Topic Description Cleanaway is dependent on technology for the delivery of various services made available to customers, including core technologies such as its phone systems, computer servers, back-end processing systems, website and other information technology systems. Cleanaway’s technology syst
Slide 40: Licences, contracts and agreements risk
Topic Description Cleanaway is party to various contractual arrangements and hold various licences, some of which are material to its operations. There is a risk that these contractual arrangements or licences Cleanaway may lose could be terminated, lost or impaired, renewed or re-negotiated on less
Slide 41: Summary of underwriting agreement
Cleanaway has entered into an underwriting agreement with the Lead Manager in respect of the Placement (Underwriting Agreement). The Underwriting Agreement contains representations and warranties and indemnities in favour of the Lead Manager. Details of the fees payable to the Lead Manager are inclu
Slide 42: Underwriting agreement termination events
• a general moratorium on commercial banking activities in Australia, New Zealand, Hong Kong, Japan, the United States, the United Kingdom or a member state of the European Union is declared by the relevant central banking authority in any of those countries, or there is a material disruption in com
Slide 43: Foreign selling restrictions
This document does not constitute an offer of new ordinary shares (New Shares) of Cleanaway in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold, in any country outside Australia except to
Slide 44: Foreign selling restrictions: Norway and Singapore
Norway This document has not been approved by, or registered with, any Norwegian securities regulator under the Norwegian Securities Trading Act of 29 June 2007 no. 75. Accordingly, this document shall not be deemed to constitute an offer to the public in Norway within the meaning of the Norwegian S
Slide 45: Foreign selling restrictions: United Kingdom
Any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received in connection with the issue or sale of the New Shares has only been communicated or caused to be communicated and will only be communicated or caused to be communicated in the Unite
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