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Pennon boosts waste business

Water utility and waste management firm Pennon Group will put £125 million raised from investors through a convertible bond [type of debt instrument] issue to be used for its subsidiary Viridor Waste Management.

Pennon finance director David Dupont told the Financial Times (31 July) that the issue would help the company finance its stake in the Greater Manchester private finance initiative for waste management and refinance the £11m acquisition last month of waste firm London Recycling.

Dupont told the FT: Were always looking to diversify funding sources for the group, and particularly for Viridor weve been keeping an eye on the convertible bond market for quite some time.

Viridor accounts for about £500m of Pennons £1.9 billion net debt and earned £108m last year.

Last week (31 July), Viridor bought Lancashire-based plastics reprocessing company Intercontinental Recycling for £8.1m (see MRW story).

Pennon chairman Ken Harvey said that Viridor was also pursuing a number of renewable energy opportunities, including the construction of a £160m energy-from-waste plant at Colnbrook near Heathrow.

He added: Overall, Viridor is well positioned to face the economic uncertainties in the UK on account of its diversified business mix, although it is by no means immune to the unfavourable economic conditions currently prevailing.

A convertible bond is a type of bond that the holder can convert in shares of common stock or cash of equal value, at an agreed-upon price.


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