Investment group One51, which was spun out from IAWS Co-op in 2005, has had a very checkered history ranging from its early ambitious equity raising to its aggressive, and at times predatory, but unco-ordinated investment strategy.

Today, the company expects its debt levels to fall to €50m by year’s end, from a high of €213m in 2009.

One51 is also predicting significant growth opportunities in association with its multi-national customers such as EMC and Wyeth in Europe and China.

Surprisingly, infant nutrition offers One51 significant expansion possibilities given its long standing relationship with Wyeth but this expansion will depend on an injection of €20m in fresh equity if these opportunities are to be exploited.

Also, the company’s plastic division, which has significant positions and customer relationships with the likes of the US multinational EMC, is now vital to growing the business into the future.

The company’s plant in China, which was opened to support EMC’s significant growth in this market, has grown turnover from €1m annually and expects this to rise to €15m by 2014.

It is also a major supplier of cans to infant formula giant Wyeth, and Wyeth’s planned expansion into China over the coming years will offer the company significant growth opportunities.

One51’s wheelie bin manufacturing plant in Britain is also seeing significant expansion opportunities across Europe, but yet again capital will be required to capitalise on these opportunities.

Unless One51 can secure the required finance to capitalise on these expansion opportunities, these will simply pass the company by, chief executive Alan Walsh told the Irish Farmers Journal this week.

But Walsh estimates a fresh equity injection of €20m is critical to enable the group to capitalise on these opportunities.

Three quarters of One51’s profits in 2008 came from its metals recycling division which then stood at €45m.

These profits have since slumped to €12m today.

The reduction in metal commodity (ferrous) prices from €450/t in 2008 to €70/t in 2009 and a collapse in the supply of metal to One51 from 270,000t to 120,000t annually threatened the company and this, combined with high company debt levels, brought the business close to the edge on a number of occasions in recent times.

One51’s own internal difficulties, including the derailed refinancing of its syndicated debt in 2011, have been well documented but the company has now since refinanced this debt facility until the end of next year.

Given its more secure financial footing, Alan Walsh is hopeful of refinancing this facility at more favourable terms over the coming months.

Its banking syndicate included Lloyds, which is exiting the Irish loan market and have recently agreed to sell its part of the syndicated loan to US debt firm Sankative Adviser (for the relatively modest discount of 8%) reflects the significantly deleveraged position and strong asset cover associated with One51.

Other banks in the syndicate include AIB, Bank of Ireland, Ulster Bank, Rabobank and KBC.

Business update

Restructuring the Irish metals recycling business including new management.

Overhauling the metals recycling business in northern England.

Reorganising its British hazardous waste management business.

Rationalising its cost base – annual cost savings of €5m have been achieved and headquarters staff has been reduced by half.

Closing the loss-making materials recycling business in Britain.

Divesting its plastic extrusion business.

Disposing of non-core assets like ICG plc, IFG plc, Thirdforce plc, and Island Renewable Energy Ltd.

Reducing debt levels by €57.5m.

Extending its banking facilities to December 2014.

Identifing future growth opportunities.

The investors

One51 investors have seen the value of the company peak at €615m in 2007, or over €6 per share, and then slump sharply over the succeeding years to its present share price of 60 cent, which values the company at €60m. One51’s 23.7% stake in NTR was once valued at €300m, but based on today’s NTR share price, this too has slumped to €40m or a share price of 80c.

Half of the €563m in assets written down by One51 can be attributed to its stake in NTR. Irish co-ops hold a 52% shareholding in One51 with Kerry Co-op and the plc being the largest shareholder with 6% of the equity. Lakelands own 3.8% of One 51 with Dairygold holding 3.13% and Glanbia 3.1%. Will investors now invest another €20m or see their share holding value diluted?

The NDR windfall

NTR, in which One51 is a major partner, sold its Greenstar recycling business in north America earlier this year for €100m and this sale will return €24m to One51 by the end of the year.

Alan Walsh believes there is an upside to NTR’s current valuation and as the investment is non-core to One51 plans on selling the stake provided the price reflects its true valuation.

Other non-core assets which are likely to be sold include Irish Pride, its 50% stake in Greenore Port in Co Louth, OpenHydro, Pioneer Green Energy as well as its property portfolio.

Irish Pride recently secured a significant contract with an Irish retailer and is set to significantly increase its turnover by the end of 2014.