Cleanaway Waste Management Ltd. · ASX:CWY
Cleanaway Waste Management — Merger or Acquisition (December 2017)
57 slides from Cleanaway Waste Management's merger presentation, Dec 11, 2017
Slide 1: Acquisition of Toxfree Solutions and Equity Raising
For personal use only wh Acquisition of Toxfree Solutions and Equity Raising 11 December 2017 0 | NOT FORNOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 2: Important notice and disclaimer
Important notice and disclaimer For personal use only IMPORTANT NOTICE AND DISCLAIMER IMPORTANT: You must read the following before continuing. By accepting or viewing this presentation you represent and warrant that you are entitled to receive or access the presentation in accordance with the restr
Slide 3: Important notice and disclaimer: forward-looking statements
Important notice and disclaimer For personal use only Future performance / forward-looking statements This presentation contains certain forward‐looking statements. The words "expect", "anticipate", "estimate", "intend", "believe", "guidance", "should", "could", "may", "will", "predict", "plan" and
Slide 4: Contents
For personal use only Contents 01 Acquisition summary 4 02 Strategic rationale 8 03 Overview of Toxfree 17 04 Trading update 22 05 Acquisition funding, financial impact and terms 24 06 Equity raising 29 A Key risks 32 B International offer restrictions 50
Slide 5: Acquisition summary
For personal use only 01 Acquisition summary
Slide 6: Acquisition summary
Acquisition summary For personal use only Cleanaway has entered into a scheme implementation deed with Toxfree to acquire 100% of Toxfree’s shares on issue by way of a recommended scheme of arrangement for $3.425 cash per share (“Acquisition”) (“Acquisition Price”) – Given the anticipated timing o
Slide 7: Acquisition summary (continued)
Acquisition summary (continued) For personal use only Toxfree is a major waste management company with a national footprint and operations across four service lines which complement and integrate into corresponding Cleanaway operations Significant work has been undertaken to rebalance the busine
Slide 8: Acquisition summary (continued)
Acquisition summary (continued) For personal use only Acquisition remains subject to customary closing conditions including Toxfree shareholder approval, court approval, ACCC approval and Scheme successful close of the institutional component of the Equity Raising implementation Acquisition expe
Slide 9: Strategic rationale
For personal use only 02 Strategic rationale
Slide 10: A strategically compelling acquisition
A strategically compelling acquisition For personal use only Toxfree complements and integrates into our operating model and enhances our business, either through geography, prized infrastructure assets or value chain benefits. It also brings with it the high growth medical business. Affirms our l
Slide 11: Cleanaway Value Operating Model – Current
Cleanaway Value Operating Model – Current For personal use only Collections Customers Solids Liquids & Industrial Services Growth & Marketing Industrial Liquids & Enterprise Services Metro C&I / Metro Muni Regional Services & Hazardous Hydrocarbons C&D Corporate Remediation Waste Fleet & Value Chain
Slide 12: Cleanaway Value Operating Model – Post Acquisition
Cleanaway Value Operating Model – Post Acquisition For personal use only Toxfree’s divisions will complement and integrate into our operations and strengthen our business across Solids, Liquids and Industrial Services while adding a new Medical segment Collections Customers Solid Waste Services Indu
Slide 13: Operating leverage potential from combined capabilities
Operating leverage potential from combined capabilities For personal use only Consolidates our position as Australia’s leading waste management company with pro forma net revenue up almost 40%, creating potentially significant operating leverage Solids – Collections Solids – Post Collections Liquids
Slide 14: Strengthening and balancing our integrated waste model
Strengthening and balancing our integrated waste model For personal use only Cleanaway Net Revenue Cleanaway EBITDA Solids by Segment FY171 by Segment FY174 Consolidates and balances: Liquids & Liquids & Industrial Industrial – Increase in QLD footprint where Cleanaway is Services Services relativ
Slide 15: Toxfree expands and enhances our capabilities and footprint
Toxfree expands and enhances our capabilities and footprint For personal use only Toxfree operates a network of 81 sites including 29 licensed facilities,1 8 of which are highly prized assets Cleanaway Toxfree Combined Expansion of capabilities and services with a number of new technologies Depots
Slide 16: Medical business overview
Medical business overview For personal use only A vertically integrated provider of healthcare waste products and services, including collection, transport and treatment of sharps, clinical and related waste Customers Daniels Health historical pro forma revenue ($m) Hospitals, Medical Centres and
Slide 17: Acquisition expected to deliver approximately $35 million in annual synergies
Acquisition of Toxfree expected to deliver approximately $35 million in annual synergies For personal use only Integration of Corporate and Enterprise Services Remove duplication in operating structure Expected annual synergies of approximately $35 million, to be Footprint optimisation – new t
Slide 18: Overview of Toxfree
For personal use only 03 Overview of Toxfree
Slide 19: Overview of Toxfree
Overview of Toxfree For personal use only Toxfree is a waste services provider with a national footprint and diversified operations across four business units Toxfree FY17 revenue: $496m FY17 EBITDA: $83m % of Normalised 33% 25% 22% 20% Group FY17 EBITDA1 Technical & Environmental Waste Services Ind
Slide 20: Toxfree's operations
Toxfree’s operations For personal use only Toxfree operates a strategic national network of prized waste infrastructure including a number of facilities with valuable licenses and treatment technologies Darwin Wyndham Narangba (QLD) Cairns Treatment facility using PlasCon technology to treat and d
Slide 21: Toxfree – growth and diversification
Toxfree – growth and diversification For personal use only Toxfree has grown from a WA based hazardous waste business to become a fully integrated national waste operator with specialisation across a number of key waste streams Listed in 2000 with two facilities in WA Toxfree revenue by operationa
Slide 22: Toxfree financial profile
Toxfree financial profile For personal use only Toxfree’s total revenue has grown significantly since 2013 driven by a number of acquisitions and organic initiatives Revenue ($m) Underlying EBITDA ($m) and EBITDA Margin (%) $496 $83 $407 $393 85 $72 $73 50% $370 75 $67 45% 65 $58 40% $285 35% 55 30%
Slide 23: Trading update
For personal use only 04 Trading update
Slide 24: Cleanaway FY18 trading update and outlook
Cleanaway FY18 trading update and outlook For personal use only FY18 earnings are expected to be in line with current market expectations, excluding the impact of the Acquisition1 As previously advised, first half FY18 results are expected to be higher than first half FY17 results (inclusive of
Slide 25: Acquisition funding, financial impact and terms
For personal use only 05 Acquisition funding, financial impact and terms
Slide 26: Acquisition funding and terms
Acquisition funding and terms For personal use only The acquisition will be partially funded via a $590 million fully underwritten 1 for 3.65 pro rata accelerated non- renounceable entitlement offer Acquisition Price of $3.425 per share Sources $m Acquisition Price represents a 27.5% premium to
Slide 27: Financial impact
Financial impact For personal use only The Acquisition is accretive to EPS, Free Cash Flow per share and Pre-tax Return on Invested Capital The integration of the Cleanaway and Toxfree businesses is expected to deliver approximately $35m in annual synergies to Cleanaway, to be realised over 2 year
Slide 28: FY17 pro forma historical profit and loss
FY17 pro forma historical profit and loss For personal use only Pro forma historical income statement and cash flow summary (excludes one-off costs associated with the Acquisition) Pro forma FY17 Pro forma Pro forma FY17 1 2 3 6 $m, 30 June year end Cleanaway Toxfree Adjustments pre synergies synerg
Slide 29: Pro forma balance sheet based on June 2017
Pro forma balance sheet based on 30 June 2017 For personal use only Pro forma historical balance sheet summary, adjusted for impact of the Acquisition (as at 30 June 2017) 1 2 3 $m, 30 June year end Cleanaway Toxfree Adjustments Pro forma 30 Jun 2017 ASSETS Cash and cash equivalents 43.2 - - 43.2 Tr
Slide 30: Equity raising
For personal use only 06 Equity raising
Slide 31: Overview of the equity raising
Overview of the equity raising For personal use only Approximately $590 million fully underwritten 1 for 3.65 pro-rata accelerated non-renounceable entitlement offer (Offer) Offer Structure Approximately 437.3 million new ordinary shares (New Shares) representing 27.4% of existing shares on issu
Slide 32: Equity raising timetable
Equity raising timetable For personal use only Event Date Trading halt and announcement of Acquisition and Offer, Institutional Entitlement Offer opens Monday, 11 December 2017 Institutional Entitlement Offer closes Tuesday, 12 December 2017 Trading halt lifted – shares recommence trading on ASX on
Slide 33: Appendix A: Key risks
For personal use only A APPENDIX Key risks
Slide 34: Key risks
Key risks For personal use only INTRODUCTION This section discusses some of the key risks associated with the Acquisition and an investment in Cleanaway. Unless the context requires otherwise, references below to “Cleanaway” or “the Company” include Cleanaway and its subsidiaries (including, followi
Slide 35: Key risks: acquisition specific risks (continued)
Key risks For personal use only ACQUISITION SPECIFIC RISKS (CONTINUED) The Acquisition will significantly change Cleanaway’s business, operational profile, capital structure and size compared to that of Cleanaway on a standalone basis, and will require a significant and complex integration process.
Slide 36: Key risks: acquisition specific risks (continued)
Key risks For personal use only ACQUISITION SPECIFIC RISKS (CONTINUED) Cleanaway undertook a due diligence process in respect of Toxfree, which relied in part on the review of financial and other information provided by Toxfree. While Cleanaway considers the due diligence process undertaken to be ap
Slide 37: Key risks: acquisition specific risks (continued)
Key risks For personal use only ACQUISITION SPECIFIC RISKS (CONTINUED) Cleanaway has entered into a commitment letter pursuant to which underwriters and/or financiers have agreed to underwrite debt financing for the Acquisition, subject to certain terms and conditions. If final documentation is not
Slide 38: Key risks: acquisition specific risks (continued)
Key risks For personal use only ACQUISITION SPECIFIC RISKS (CONTINUED) Cleanaway and its subsidiaries (which, following completion of the Acquisition, will include Toxfree) are party to various contractual arrangements and hold various licences, some of which are material to their operations. There
Slide 39: Key risks: risks related to an investment in Cleanaway
Key risks For personal use only RISKS RELATED TO AN INVESTMENT IN CLEANAWAY Cleanaway provides its services and products to individuals, companies and government agencies across a range of economic sectors in Australia including the manufacturing, industrial, construction and resources sectors. The
Slide 40: Key risks: investment risks (continued)
Key risks For personal use only RISKS RELATED TO AN INVESTMENT IN CLEANAWAY (CONTINUED) Cleanaway and Toxfree’s operations are subject to extensive federal, state and local environmental laws and regulations, and Cleanaway holds certain environmental licences and permits for its sites. These laws an
Slide 41: Key risks: investment risks (continued)
Key risks For personal use only RISKS RELATED TO AN INVESTMENT IN CLEANAWAY (CONTINUED) Cleanaway is also subject to occupational health and safety requirements and technical and safety standards, as well as general regulation, including in relation to land use and land access, native title and cult
Slide 42: Key risks: investment risks (continued)
Key risks For personal use only RISKS RELATED TO AN INVESTMENT IN CLEANAWAY (CONTINUED) The success of Cleanaway's businesses and their ability to grow relies on a number of business relationships and contracted revenue with clients, including Cleanaway’s ability to retain major customer relationshi
Slide 43: Key risks: investment risks (continued)
Key risks For personal use only RISKS RELATED TO AN INVESTMENT IN CLEANAWAY (CONTINUED) Cleanaway’s continued ability to operate its business and effectively implement its business plan over time will depend in part on its ability to raise funds for operations and growth activities and to service, r
Slide 44: Key risks: investment risks (continued)
Key risks For personal use only RISKS RELATED TO AN INVESTMENT IN CLEANAWAY (CONTINUED) Cleanaway’s forecasts are based on the information available at the time, and certain assumptions in relation to the cost and timing of planned development or expansion of facilities, receipt of design and develo
Slide 45: Key risks: investment risks (continued)
Key risks For personal use only RISKS RELATED TO AN INVESTMENT IN CLEANAWAY (CONTINUED) 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
Slide 46: Key risks: investment risks (continued)
Key risks For personal use only RISKS RELATED TO AN INVESTMENT IN CLEANAWAY (CONTINUED) Cleanaway’s ability to leverage its innovation and expertise depends upon its ability to protect its intellectual property and any improvements to it as well as Cleanaway’s confidential information. Intellectual
Slide 47: Key risks: general risks
Key risks For personal use only GENERAL RISKS The Australian and global economies continue to experience challenging economic conditions. Cleanaway's operating and financial performance is influenced by a variety of general economic and business conditions, both domestic and global, including (but n
Slide 48: Key risks: general risks (continued)
Key risks For personal use only GENERAL RISKS (CONTINUED) Future changes in taxation law in Australia and in other jurisdictions, including changes in interpretation or application of the law by the courts Taxation or applicable taxation or revenue authorities in Australia or other jurisdictions, ma
Slide 49: Key risks: offer specific risks
Key risks For personal use only OFFER SPECIFIC RISKS Cleanaway has entered into an underwriting agreement (Underwriting Agreement) with Macquarie Capital (Australia) Limited (Underwriter), pursuant to which the Underwriter has agreed to fully underwrite the Offer on the terms and conditions of the U
Slide 50: Key risks: offer specific risks (continued)
Key risks For personal use only OFFER SPECIFIC RISKS (CONTINUED) You should note that if you do not participate in the Offer, or do not take up all of your entitlement under the Offer in full, then your percentage security holding in Cleanaway will be diluted and you will not be exposed to future in
Slide 51: Appendix B: International offer restrictions
For personal use only B APPENDIX International offer restrictions
Slide 52: International offer restrictions
International offer restrictions For personal use only Canada (British Columbia, Ontario and Quebec provinces) This document constitutes an offering of New Shares only in the Provinces of British Columbia, Ontario and Quebec (the "Provinces") and to those persons to whom they may be lawfully distrib
Slide 53: International offer restrictions
International offer restrictions For personal use only Section 138 of the Securities Act (Ontario) provides that no action shall be commenced to enforce these rights more than (a) in the case of any action for rescission, 180 days after the date of the transaction that gave rise to the cause of acti
Slide 54: International offer restrictions
International offer restrictions For personal use only France This document is not being distributed in the context of a public offering of financial securities (offre au public de titres financiers) in France within the meaning of Article L.411-1 of the French Monetary and Financial Code (Code moné
Slide 55: International offer restrictions
International offer restrictions For personal use only Malaysia This document may not be distributed or made available in Malaysia. No approval from, or recognition by, the Securities Commission of Malaysia has been or will be obtained in relation to any offer of New Shares. The New Shares may not b
Slide 56: International offer restrictions
International offer restrictions For personal use only Singapore This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other docum
Slide 57: International offer restrictions
International offer restrictions For personal use only United Arab Emirates Neither this document nor the New Shares have been approved, disapproved or passed on in any way by the Central Bank of the United Arab Emirates, the Emirates Securities and Commodities Authority or any other governmental au
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