Cleanaway Waste Management has agreed to purchase SKM Recycling facilities for $66 million and the company will employ SKM’s former staff in Victoria to get those sites up and running.
On October 9, the ASX-listed company announced that it will acquire the properties, plant and equipment and certain other assets of SKM.
The acquisition is expected to be completed by the end of October.
SKM Recycling was placed into receivership in August after it was announced the company owed $100m, with $60m of that owed to Cleanaway Waste Management. Sale proceeds will be applied to repay Cleanaway’s senior secured debt, accrued interest and costs associated with the receivership.
Cleanaway will acquire five recycling sites, including three material recovery facilities (MRFs) and a transfer station in Victoria and a material recovery facility in Tasmania. The company expects to offer employment to the majority of SKM’s full-time employees.
The site in Laverton North, Victoria, includes an advanced plastic sorting facility, which separates plastics from MRFs into clean, individual polymer grades for sale or input into palletising facility.
Cleanaway CEO and managing director Vik Bansal said that since the appointment of receivers and managers, significant progress had been made in clearing waste stockpiles from the sites repairing plant and equipment and bringing the sites to required safety, environmental and operational standards.
KordaMentha’s Mark Korda and Bryan Webster were appointed as the receivers and managers in late August.
“We expect to gradually restore operations in Victoria over the coming months to provide councils with a quality, sustainable solution for their recycling,” Bansal said.
“The acquisition proves Cleanaway with a strong recycling platform in Victoria and Tasmania as part of our Footprint 2025 strategy and our mission of making a sustainable future possible.
“The recycling sector is undergoing significant structural changes with a move to increase recycling within Australia to support a transition towards a circular economy. The acquisition provides us with the infrastructure to capitalise on the growth opportunities created by these changes,” Bansal said.
Thirty-three Melbourne councils held contracts with SKM Recycling and as a result of the closures in August, some councils were forced to send recyclable material to landfill.
As late as September 23, the City of Melbourne was sending 45 tonnes of recycling to landfill each day, as the council had no immediate alternative.
After almost two months, the council reached an agreement to resume the processing of household recycling. City of Melbourne lord mayor Sally Capp said the council had reached an agreement that will see the processing of household recycling resume immediately.
The short-term arrangement to process household recycling was reached while KordaMentha sought to finalise the sale of SKM, Capp said in late September.
The acquisition of SKM facilities also includes two properties in South Australia, which are currently not expected to form part of future operations and may be sold.