Important Acquisition for Tox Free Solutions

By Victor Bivell

Tox Free Solutions has added significant bulk in NSW with the $70 million acquisition of Worth Corporation Pty Ltd. Tox paid in cash and raised $20 million in an institutional placement and will raise another $4 million through a share purchase plan, both at $2.55 per share.

Worth is a leading liquid waste and industrial services business that was established in 1976 and operates under the name Worth Recycling. The business has 130 employees including three senior managers and 60 truck drivers.

Tox said the acquisition gives it a significant position in the industrial waste market, and ownership of strategic Environmental Protection Authority (EPA) licensed liquid treatment, soil remediation and chemical immobilization facilities. Worth's knowhow and technical capabilities can be used throughout Tox Free's operations, and there are opportunities to align and rationalize facilities.

Tox managing director, Steve Gostlow, said Worth's facilities would be very difficult to replicate and will provide a strategic advantage in winning new business in liquid and solid waste treatment.

On a pro forma basis for 2015-16 Tox would have expected Worth to deliver full year revenue of $62.4 million, earnings (EBITDA) of $12.9 million, and be 13 per cent earnings per share accretive. NSW will go from 4 to 16 per cent of Tox's revenue.

Post the acquisition and equity raising, Tox will have a gearing of 41 per cent.

Operationally and assets wise, Worth has liquid waste and industrial waste treatment plants in Windsor in Sydney, a soil remediation and chemical immobilization facility at St Marys in Sydney, liquid waste treatment facilities in the Illawarra including onsite facilities at the Bluescope Pt Kembla site and the Tahmoor and Douglas Park coal mines, and liquid waste and industrial services in the Hunter Valley with a new and expanded site to commence in the near future.

Tox and Worth sites around Sydney.

The company's skills extend to designing, building and operating major industrial waste treatment plants. The EPA licenced depot and treatment plant at Windsor processes the sort of yukky stuff that people don't want to know about: oily sludge, slops oils, oily waters, drill muds and contaminated solids/ sludge and wastewater emulsions. The plant has capacity to treat one million litres of wastewater per week and about 90 per cent of it is recycled.

The EPA approved depot and treatment plant at BlueScope Steel in Port Kembla processes waste oils, sludges and wastewaters from steelmaking and oily water wastes from other sources. It can treat 2.5 million litres of wastewater per week.

Worth also developed the EPA licensed facility at St Marys which can treat and chemically immobilize up to 100,000 tonnes of hazardous waste including contaminated soils, drill muds, and packaged waste. The site has approval for further development including a liquid waste treatment plant.

Worth has an industrial services depot in Kurri Kurri in the Hunter Valley, a liquid treatment facility at the Tahmoor coal mine, and truck depots.

Tox and Worth are both good examples of how keeping the environment clean can be a very dirty business. But investors like it. The deal added 48 cents or 18 per cent to Tox's share price. (ASX: TOX)

A Worth Recycling Truck.





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