New Earth Recycling & Renewables, the infrastructure fund that finances waste treatment firm New Earth Solutions, has called in administrators.
As MRW reported on 24 May, the move was anticipated if negotiations for a takeover by a combined heat and power developer on the continent failed.
Now director Michael Richardson has written to shareholders to say those talks had failed, and “the directors of the New Earth companies, in consultation with their advisers, decided that the New Earth companies were required to seek statutory protection by filing a notice for the appointment of an administrator”.
The letter explains: “Negotiations were on the assumption of control of the fund and the New Earth companies by the developer and the exit of the senior lenders. There were extensive discussions on how best to restructure the business operations. Unfortunately, these negotiations have not been successful.”
Richardson’s letter says that the “protracted” negotiations had led to an agreement for the developer to purchase the senior debt, subject to conditions and the source of financing being completed by the end of May.
This process was set out when the annual reports were filed on 19 May.
But a key factor has been the decision by companies taking the off-takes (‘off-takers’) processed by New Earth plants to cancel their collections or demand different payment terms.
“The risk with off-takers crystallised immediately following the filing of the accounts, when the New Earth management was approached by off-takers requesting immediate settlement of outstanding payments or bank guarantees and threatening not to take any further off-takes,” the letter says.
“It should be noted that, without off-takes in place, the New Earth companies cannot process waste which, in turn, puts the waste contracts with the local authorities in jeopardy. The senior lenders indicated that they were not prepared to provide bank guarantees to the off-takers nor to finance the New Earth companies to fund accelerated payment requests by the off-takers.”