Many thanks fastbucks.Another article from The Australian...

Many thanks fastbucks.

Another article from The Australian yesterday - looks like they have a large job in front of them.
Cheers,
MB

Transpacific Industries dumps goodwill in profit warning
TIM BOREHAM From: The Australian June 29, 2011 12:16PM

IS Transpacific rubbish, or just temporarily down in the dumps?

One of the sickest stocks of 2010-11, the waste manager has consigned up to $250m of goodwill to the dumpster in an attempt to clear the air and win back market confidence.

This morning's business update -- in which the company reaffirmed underlying earnings guidance and its approach to debt reduction -- provided tepid support to the stock, which has halved since January.

While some impairments were expected, no-one thought management would wipe off all of the manufacturing division's acquired goodwill ($40-45m) and a whopping $180-200m from the NZ division.

But there's a historical air to the non-cash impairments, in that management stresses the company's current performance (predominantly via its Cleanaway operation) is quite strong.

Related Coverage
Little wiggle room to escape dumpster The Australian, 9 hours ago
Transpacific profit cleaned away The Australian, 9 hours ago
Net loss looms for waste company Courier Mail, 9 hours ago
Transpacific not ready for the bin Herald Sun, 11 hours ago
NZ woes weigh on Transpacific Herald Sun, 16 hours ago


The NZ writeoff resulted from the need to ``apply a more conservative growth rate'' given the general NZ economic troubles and the Christchurch disasters (ironically though Transpacific is a direct beneficiary of the quake).

As part of a renewal process, the board appointed former Visy man Kevin Campbell as CEO in January and Stewart Cummins as CFO in May.

The basic remedial measures appear to be in train. But weighing over the company is a balance sheet with about $1.4 billion of debt, $480m of which matures next year.
Management reports it's in compliance with its banking covenants and plans to apply $120-180m of free cash flow (over the next 18 months) to reduce debt. ``Transpacific's position remains sound and the company has numerous options available to it for meeting upcoming debt maturities.''

Criterion rated Transpacific an avoid at $1.26 in July 2009, after private equiteer Warburg Pincus supported an $800m emergency raising and emerged with a 34 per cent stake.

Founder Terry Peabody lurks on the register with 18 per cent, amid rumoured intentions of a John Farnham-style comeback tour.

Transpacific is one of those stocks that could go either way: outright failure or incremental improvement (Sigma Pharmaceuticals, last year's debt-laden dud shows it can be done).

We'll reserve our rating until we nut out which way this one's likely to go

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