BFI Canada Income Fund has announced that its principal operating subsidiaries have entered into an agreement with Waste Management of Canada Corporation to purchase the Ridge landfill, located near Chatham, Ontario, for approximately CDN $110 million.
With an annual permitted capacity of 680,000 tonnes, the Ridge provides an important and ongoing solution to Ontario’s non-hazardous, solid waste management challenge. By acquiring it, BFI Canada will be able to increase internalization of volumes and further enhance its market presence in Ontario while delivering immediate and long-term economic benefits to its unitholders.
Management of BFI Canada estimates that the acquisition of the Ridge landfill is expected to be immediately accretive to BFI Canada’s free cash flow available for distribution per unit on a fully diluted basis, after giving effect to the recently announced agreement to acquire IESI Corporation of Fort Worth, Texas. The Ridge acquisition is expected to close, subject to Competition Bureau or Tribunal approval, on or before January 4, 2005. BFI Canada intends to fund the purchase price of the Ridge landfill from the proceeds of its recently announced offering of subscription receipts. Pending the closing of that offering and the related transaction with IESI Corporation, expected in mid-January 2005, the purchase price will be funded through BFI Canada’s existing revolving credit facility together with temporary bridge financing. As such, BFI Canada does not expect to increase its overall leverage as a result of the Ridge acquisition.
"Landfills of this magnitude are a scarce asset in North America today and because of its strategic location in Ontario — Canada’s largest market for environmental services — we believe that the Ridge landfill is truly unique," said Keith Carrigan, President and CEO of BFI Canada. "We’re delighted to be able to add it to our expanding footprint in southern Ontario because it enables us to optimize performance for our existing collection operations by internalizing volumes and achieving a higher degree of vertical integration. The Ridge landfill rounds out our base platform in Ontario, and was acquired at a reasonable price so as to be immediately accretive to unitholders following the acquisition."
Mr. Carrigan added that the Ridge landfill’s current annual capacity "not only fulfills the current needs of BFI Canada’s collection and transfer operations in Southern Ontario today, but also provides us with the ability to support additional growth."
The Ridge landfill has an estimated operating life of 19 years and accepts industrial, commercial and institutional (IC&I) waste from across Ontario as well as waste from nearby municipalities. The site encompasses an area of approximately 262 hectares, 135 of which are permitted for landfilling. For the year ended December 31, 2003, management of BFI Canada estimates that the Ridge landfill generated revenue of approximately $17 million and EBITDA of approximately $12 million.
"The Ridge landfill is a well-engineered, well-run facility, and as part of BFI Canada, it will continue to operate to best practice standards," said Martin Irish, BFI Canada Vice President Ontario and Manitoba. "With the Ridge landfill, BFI will compete for the disposal of IC&I waste from the GTA as well as the Chatham-Kent area."
About BFI Canada
BFI Canada Income Fund, through its subsidiaries, is one of Canada’s largest full-service waste management companies, providing non-hazardous solid waste collection and landfill disposal services for municipal, commercial, industrial and residential customers in the provinces of British Columbia, Alberta, Manitoba, Ontario and Quebec. The Fund’s units are listed on the Toronto Stock Exchange under the symbol BFC.UN. For more information on the Fund, visit www.bficanada.com
For further information, please contact:
President & Chief Executive Officer, BFI Canada
Manager, Investor and Employee Relations, BFI Canada
This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities described herein in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to qualification or registration under applicable securities laws of any such jurisdiction. The securities described herein have not been, and will not be, registered under the Untied States Securities Act of 1933 (the "Securities Act") and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act.
References to "EBITDA" in this news release this are to net income (loss) before some or all of the following: cumulative effect of a change in accounting principle net of income tax benefit, income tax expense (recovery), other income (expense), loss on extinguishment of debt, loss on termination of interest rate swaps, gain on sale of capital assets or net (gain) loss on sale of capital and landfill assets, write-off of deferred financing costs, interest expense or interest on long-term debt, amortization or depreciation, depletion and amortization.
These items are viewed by management of BFI Canada as either non-cash (in the case of amortization or depreciation, depletion and amortization, write-off of deferred financing costs, loss on extinguishment of debt, cumulative effect of a change in accounting principle net of income tax benefit and future income taxes) or non-operating (in the case of interest expense or interest on long-term debt, gain on sale of capital assets or net (gain) loss on sale of capital and landfill assets, loss on termination of interest rate swaps, gain on settlement of bond forward contracts and current income taxes). EBITDA is a term used by the Fund that does not have a standardized meaning prescribed by Canadian GAAP. The method of calculating EBITDA used by the Fund may differ from methods used by other entities and, accordingly, it is unlikely to be comparable to similar measures used by other issuers. EBITDA is a useful financial and operating metric for investors as it represents a starting point in the determination of free cash flow available for distribution.
EBITDA should not be construed as a measure of income or of cash flows determined in accordance with Canadian GAAP. The reconciling items between EBITDA and net income are detailed in the consolidated statements of operations beginning with income before the following or income from operations before depreciation, depletion and amortization and ending with net income (loss).
This document may contain forward-looking statements relating to the Fund’s operations or to the environment in which it operates, which are based on the Fund’s operations, estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict, or are beyond the Fund’s control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. These factors include those set forth in the Fund’s renewal Annual Information Form for the period ended December 31, 2003. Consequently, readers should not rely on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they are made. Although the forward-looking statements contained herein are based upon what management believes to be reasonable assumptions, the Fund cannot assure unitholders that actual results will be consistent with these forward looking statements, and the Fund disclaims any intention or obligation to up
date or revise any forward-looking statements, whether as a result of new information, futur
e events or otherwise.