Warburg exits ailing Australian group

The private equity firm has sold a stake worth A$562m in Transpacific Industries Group, which has been divesting business units after making an H1 loss.

Warburg Pincus has sold all its shares in Australia’s Transpacific Industries Group through a placement to domestic and international institutions, according to a company statement. 

Transpacific is a Brisbane-based recycling and waste management company. The placement represents a 33.9 percent stake, with shares priced at A$1.05, a 6.7 percent discount to the last traded price on Friday 1 November 2013, the statement said. 

The firms did not disclose the deal value, but a source close to the deal confirmed to Private Equity International that it was worth A$562 million (€395 million; $533 million). 

As a result, Warburg has withdrawn from the company, with Jeffrey Goldfaden, managing director at the firm, stepping down from Transpacific’s board. 

“Jeff and Warburg Pincus have made a significant contribution to the governance and also to the direction of TPI since making their investment in 2009. Without their investment it is doubtful TPI would be in the position it is today,” Martin Hudson, chairman of Transpacific, said in a statement.

“While we are sorry to lose Jeff’s expertise on the board, we are pleased with the strong support from institutional investors evident in the robust pricing and expedient disposal of the stake.”

Warburg invested in Transpacific in 2009 as part of a refinancing deal to help with the company’s overwhelming debt burden, according to media reports earlier. During the first half of 2013, Transpacific recorded a A$200 million net loss. 

Since, the company has opted to sell its commercial vehicles group to US-based Penske Automotive Group in an A$219 million deal and last week reportedly put its New Zealand-based business up for sale. 

In another sale of a company with burdensome debt, Apollo Global Management and Oaktree Capital Management released a prospectus to sell down shares in Australian TV channel Nine Entertainment this week, PEI reported earlier.

The two firms won control of Nine from CVC Capital Partners in a $3.4 billion debt-for-equity swap in October last year. 

CVC invested in the business over two tranches between 2006 and 2008 in a debt-heavy transaction and suffered a $2 billion loss as the business could no longer pay its debts.