Shares in waste management group Renewi (RWI) slumped, after the group announced new provisions against some of the private finance initiative (PFI) contracts in its municipal division.
Management said provisions were likely in February, but investors were clearly surprised at the size of the provisions. The group plans to write down £73m in onerous contract provisions, non-cash impairments and other measures across its contracts in Barnsley, Doncaster and Rotherham and Wakefield. It will also exit its Dumfries and Galloway PFI contract.
The group’s cash flow and banking covenants will not be affected by the provisions, management said, and the 2018 outlook for underlying profits and cash is also unchanged. Analysts at Peel Hunt revised their price target down to 118 from 124p.
