Question marks have been raised in the National media on the financial stability of Biffa, the company that has the contract with the Isle of Wight council to collect, process and dispose of the Island’s household rubbish.
The Press Association (PA) reported that the company “is handing control of the business to creditors led by banking giant HSBC after struggling to repay debts.”
Impact on the Island
It’s early to know what impact this might have on the Island and the council. We’ve just put the following questions to IWC and will report back when we get a reply.
1) Are the council concerned about these reports?
2) What contingency plans do the council have in place if Biffa went out of business? (As public toilet cleaning company Fountains did at the start of this year.)
It’s not often discussed by those at the council, but their contract with Biffa – and hence the Island – is in fact a PFI contract.
The council has said it will spend £1 million this year working out how and who will have the Island’s waste contract (including £0.5 million pounds to be spent on consultants), come 2015, when Biffa’s contract comes to an end.
How this came about
Although the company reported having made over £750 million in sales, it declared a loss of over £150 million.
PA reports that “its profits have been wiped out by large interest payments” as it was saddled with over £1 billion debt after it was taken private by three investment firms: Montagu, Global Infrastructure Partners and the private equity arm of Halifax Bank of Scotland in 2008.
Biffa’s reaction
We’ve put some questions to Biffa, but haven’t, at the time of publishing, received a reply. A Biffa spokesman told PA: “Biffa is a profitable, cash generative business which is performing in line with its plans. The company is undertaking a well-managed, planned restructuring process, working with its lenders to reduce the debt on the business.”
Source: Press Association report
Image: criminalintent under a CC BY-SA 2.0 license
