Solid Waste & Recycling

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One to Watch (June 01, 2002)

On April 25, 2002 BFI Canada Income Fund completed a $175-million Initial Public Offering of 17.5 million units at $10 per unit. The proceeds of the offering were used to acquire the business of BFI C...


On April 25, 2002 BFI Canada Income Fund completed a $175-million Initial Public Offering of 17.5 million units at $10 per unit. The proceeds of the offering were used to acquire the business of BFI Canada and to repay debt. In June 2000 BFI was purchased by its management and other investors from Allied Waste Industries in connection with a 1999 Competition Bureau ruling.

The goal of the fund is to pay out the income of BFI Canada to unit holders on a monthly basis. The initial distribution of $0.11667 per units was set for June 14, 2002, to holders of record on May 31, 2002.

BFI Canada is a service provider of non-hazardous solid waste collection and disposal services to commercial, residential and industrial customers in B.C., Alberta, Manitoba, Ontario and Quebec. The company operates three landfill sites, three transfer facilities, seven material recovery collection facilities, one landfill gas-to-energy facility, and has collection operations in 18 markets.

For the year ended December 31, 2001 the company generated $128-million in revenues from 36,900 customers. In February 2002 BFI Canada acquired FA, a residential collection company operating in the Montreal area. This acquisition is expected to add $16-million in revenues and $2-million in EBITDA to the fund per year.

Hot Sector News

Earth Tech, a division of Tyco International, received a US$26.4-million contract to provide design and construction services for a waste-to-energy plant in Grimsby, England. This plant is expected to convert more than 56,000 tonnes of waste per year to electricity.

Raleigh, North Carolina-based Waste Holdings Inc. recently announced the purchase of American Disposal, LLC, a provider of hauling services to the construction industry in the Memphis, Tennessee market. It also acquired the customer accounts of Hudgins Disposal Inc., a hauling and disposal company in Nashville, Tennessee. Waste Holdings also purchased Georgia Waste and Recycling, which provides non-hazardous waste services to five counties in the northeast metro Atlanta region. Finally, the company announced the opening of two facilities: the Red Rock Construction and Demolition Landfill in Wake County, N.C. and a transfer station located in Durham, N.C.

In April and May, a number of solid waste companies reported their first quarter results:

Allied Waste Industries (Scottsdale, Arizona): revenue fell 2.8 per cent to US$1.32-billion. EPS were 17 cents vs. a loss of 19 cents per share a year earlier.

Waste Management Inc. (Houston, Texas): revenue fell 4 per cent to US$2.61-billion. EPS were 22 cents vs. 20 cents.

Republic Services (Fort Lauderdale, Florida): revenue rose 3.1 per cent to US$551.9-million. EPS were 32 cents vs. 29 cents.

Waste Connections (Folsom, California): revenue rose 24 per cent to US$105.7-million. EPS rose 35 per cent to 43 cents.

Clean Harbors (Braintree, Massachussets): revenue rose 3 per cent to US$53.3-million. Loss per share improved to 2 cents vs. 10 cents.

Wittke Inc. (Calgary, Alberta): revenue grew 58 per cent to $39.8-million. EPS were 23 cents vs. 6 cents.

Vivendi Environnement and Suez (both of Paris, France): won several major water contract contracts recently. Vivendi won a US$9.25-billion 50-year contract to provide drinking water for the Pudong area of Shanghai, China. Suez won a 430 million euro contract to manage drinking water facilities in Quingdao, China, and a 26.7 million euro deal to rebuild two drinking water treatment plants in Shanghai, China. Suez also won a 10-year US$4-billion contract to supply water services to Puerto Rico.

These articles are based on public sources deemed to be accurate. These articles are designed for information purposes and are not intended as a recommendation of the companies discussed. Individuals looking to invest in this sector should consult an investment advisor before proceeding.

Colin Cieszynski is an investment advisor at Canaccord Capital. Contact Colin at 416-867-4543; fax 416-879-7706; or email Colin_Cieszynski@canaccord.com.


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