Australia’s largest garbage company buys $60m of debt, aiming to get SKM ‘back to capacity’

This article is more than 1 year old

This article is more than 1 year old

The garbage company Cleanaway has taken effective control of most of the Victorian recycling group SKM and says it wants to stem the state’s rubbish crisis.

Cleanaway said it had paid about $60m to the Commonwealth Bank to buy out the bank’s position as SKM’s major lender and had appointed Mark Korda and Bryan Webster as receivers to run the business.

Its position as secured creditor puts Cleanaway in the box seat to buy most of SKM if the receivers decide to put it up for sale.

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The receivership covers all of SKM’s business except glass recycling, which separately owes Westpac about $5m.

SKM, which has been derided by the state government as “cowboys”, has been in crisis since the start of the year after a series of fires at its recycling stockpiles prompted the Victorian Environment Protection Agency to restrict its ability to take in new rubbish.

It was also hit by a crackdown from Chinese authorities on importing waste from Australia – part of a general move across Asia to stop accepting other people’s garbage.

The crisis reached a new high three weeks ago when SKM stopped taking recycling from more than 30 councils, resulting in more than 180,000 tonnes a year potentially being sent to the tip.

Facebook Twitter Pinterest Tens of thousands of tonnes of recycling waste were found on sites rented by SKM. Photograph: Carly Earl/The Guardian

Korda said debts owed by SKM totalled about $100m. He said the receivers “will be aiming to get the business back to capacity to help ease Victoria’s waste crisis”.

“This must be done within our statutory obligations to get the best value from the business while repaying the secured creditor,” Korda said. “We will also begin working immediately with the Victorian government and regulators to prepare for a path forward.”

The receivers said they would put SKM’s operations on pause while assessing the business, including the stockpiles of recycling that have banked up at sites around Melbourne.

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They then plan to come up with a “rescue and restructure package” and may put it on the market.

It is not clear how much SKM owed the CBA, although some market sources indicated Cleanaway paid close to 100c in the dollar to take over the bank’s position.

Cleanaway’s managing director, Vik Bansal, said the company was interested in buying all or part of SKM’s assets from the receivers.

“If a sale process is undertaken and, if we are successful in purchasing any assets, we will return the assets to a sustainable footing,” Bansal said.

It is believed Cleanaway is also interested in buying the glass recycling business not covered by the receivership.