ASSET DESCRIPTION
- Operating alternative waste treatment plant, 40km west of Sydney
- Receives 220kt of household solid waste per annum, and sorts into recyclables, organics and residual waste for landfill
- Contract with SITA (backed by NSW Government guarantee) until 2032
- 50% equity interest
- Palisade has Board representation
INVESTMENT FUNDAMENTALS
- Strong cash yield backed by NSW Government guaranteed revenue stream
- Potential growth opportunity to expand plant capacity and implement additional diversion processes
- Conservative gearing levels
- Preferential yield to Palisade through a Shareholder Loan instrument
KEY RISKS AND MITIGATION
- Revenue risk is managed through fixed price, fixed volume contract with SITA (ultimately backed by NSW Government guarantee)
- Seasonal conditions mitigated, as well as exposure to variations in waste input quality, through monthly waste audits and subsequent contractual adjustments to price
- Operating costs management necessary to maintain EBITDA margins
- Asset condition managed through modular nature of the plant and proactive/reactive maintenance procedures
- Refinancing risk mitigated through conservative capital structure
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