WasteCo prices $2 million placement at $0.007 per share

Capital Raise Targets Turnaround Amid Loss

WasteCo Group Limited (NZX:WCO) has launched a $2 million share placement priced at $0.007 per share, aiming to shore up its balance sheet and fund a comprehensive turnaround plan following a significant net loss in FY 2026. The offer, which opens on 2 September and closes on 21 September, includes an option to accept up to a further $1 million in oversubscriptions at the board’s discretion.

The capital raising is a critical step in WasteCo’s strategy to reverse its financial performance, which saw a net loss of NZ$12.35 million in FY 2026 despite revenue growth from $19 million in FY 2022 to $70.3 million in FY 2026. The company’s adjusted Operating EBITDA was NZ$6.73 million after excluding one-off costs related to health and safety improvements and restructuring.

Funding Growth and Restructuring Initiatives

Proceeds from the placement will be allocated to supporting a new nine-year, $40 million kerbside collection contract with Ashburton District Council commencing September 2026, funding the costs of the company’s turnaround plan, providing growth capital for existing operations, and bolstering general working capital.

WasteCo’s turnaround plan is aggressive and multifaceted, focusing on reducing an annualised cost base by approximately NZ$5 million through structural rationalisation, divesting non-core or loss-making business divisions, and selling surplus assets to generate NZ$10-12 million in sale proceeds. The company is also implementing rigid cost controls and improving labour and asset utilisation to enhance profitability.

Leadership Overhaul and Operational Reset

Central to the turnaround is the appointment of Brian Cohalan as the new permanent CEO, effective 31 August. Cohalan brings extensive experience from senior roles in the Australian waste industry, including leadership at Sita Environmental Solutions and Cleanaway. His expertise is expected to complement WasteCo’s leadership team and drive operational and financial improvements.

Since the leadership changes, WasteCo has restructured its senior team, replaced specialised vehicles to improve margins, and opened a new Medical and Quarantine waste transfer facility in Cromwell. These initiatives underpin the company’s commitment to operational discipline and growth.

Convertible Notes Conversion and Share Purchase Plan

The completion of the placement will trigger the conversion of recently issued convertible notes into ordinary shares, further altering the company’s capital structure. WasteCo currently holds approximately NZ$40.1 million in debt, including secured and unsecured convertible notes with varying interest rates and maturity dates. The company is actively managing its debt profile and exploring refinancing options to improve liquidity.

In parallel with the placement, WasteCo plans to launch a Share Purchase Plan (SPP) for New Zealand-based shareholders, allowing them to subscribe for up to NZ$50,000 in new shares at the same issue price of $0.007. Documentation for the SPP will be distributed before the Annual Meeting scheduled around 22 September 2026.

Challenges and Prospects Ahead

WasteCo’s challenges stem from a mix of high debt levels, oversized corporate overheads, legacy unprofitable divisions, and suboptimal asset and labour utilisation. The company acknowledges it grew revenue without adequately managing margins, resulting in losses despite scale.

The board, led by Chair Sean Joyce since July 2026, is focused on restoring shareholder confidence through transparent communication, operational discipline, and strategic growth. The company aims to grow revenues to $85 million by FY 2028 and significantly improve operating EBITDA through cost reductions and efficiency gains.

While the current market capitalisation stands at approximately NZ$7.68 million, WasteCo sees substantial upside potential if its turnaround plan succeeds. However, the path to profitability remains uncertain, hinging on execution of cost-cutting, asset sales, and operational improvements amid challenging economic conditions.