Saturday 18 November 2017

Panda's power play as it agrees to buy Bioverda from Cerberus

Bioverda extracts methane gas from landfill sites and generates electricity that is currently sold to Airtricity and Vayu. Stock image
Bioverda extracts methane gas from landfill sites and generates electricity that is currently sold to Airtricity and Vayu. Stock image
John Mulligan

John Mulligan

The country's biggest waste management firm, Panda, has agreed to buy electricity producer Bioverda, as it deepens its nascent presence in the power market.

Bioverda, owned by US investment firm Cerberus, extracts methane gas from landfill sites and generates electricity that is currently sold to Airtricity and Vayu.

The acquisition of Bioverda - once a part of Greenstar - will see Panda's power business take the first step towards being vertically integrated. It currently owns no other power generating assets.

Industry sources reckon the sale to Panda could be worth as much as €12m. It's thought that the Bioverda sites currently produce a total of about 20 megawatts of electricity.

Bioverda generates power at a number of active and decommissioned landfill sites, at locations including Kill in Co Kildare and Dunsink in Co Dublin.

Speaking to the Irish Independent, Panda founder Eamon Waters declined to comment on the price the company is paying for Bioverda.

He said that the opportunity had arisen to acquire the business and it made sense for the company given its entry into the power market. Panda might also look at building large solar farms on decommissioned landfill sites where Bioverda has plants.

As part of the Bioverda acquisition, Panda is also buying a connected firm, Starrus LFG.

It will be the second acquisition from Cerberus that Panda has made. Last year, Panda bought rival waste firm Greenstar, which Cerberus bought out of receivership in 2014.

The Greenstar sale to Panda saw Cerberus retain the Bioverda landfill energy business that was part of Greenstar.

Almost a decade earlier, Greenstar had made a failed play to buy Panda in an approach reckoned to be worth €65m at the time.

Panda has about 150,000 residential and 15,000 business waste customers.

When it was acquired by Panda last year, Greenstar had 80,000 residential customers and also had 15,000 business customers.

The Competition and Consumer Protection Commission (CCPC) ordered Panda to sell Greenstar's domestic waste collection business in two Dublin areas - Dun Laoghaire-Rathdown and Fingal - in order to allow the Greenstar acquisition to complete.

Panda launched its Panda Power business in 2015, muscling in on an already crowded consumer electricity market. It said it had invested €40m establishing its energy business and would compete aggressively on pricing.

It was initially set to focus on supplying power to its own customer base, which is primarily centred around Dublin.

Bioverda generated profits of €1.7m in the 12 months to the end of March last year, on revenue of €4.8m.

Accounts for Starrus LFG note that in May 2015, it bought the Bioverda businesses from a connected company in return for the assumption of €15m in debt owed to a Cerberus firm.

Starrus LFG posted a loss of €3.4m in the 12 months to the end of March last year.

That was after impairing the landfill gas assets to the tune of €1.5m, and including a €1.4m interest charge related to the €15m debt that was assumed.

There was an €864,000 royalty payment made for being permitted to operate on the landfill sites. The planned Bioverda acquisition has been referred to the CCPC for review.

Irish Independent

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