The Company, called Orizon Valorização de Resíduos S.A., and previously known as Haztec Investimentos e Participações S.A. (“HIP”), was founded on November 30, 2009 with the sole purpose of being the investment vehicle of the shareholders who were previously direct investors in Orizon Meio Ambiente S.A., formerly called Haztec Tecnologia e Planejamento Ambiental S.A. (“HTPA”), and founded on June 14, 1999. The purpose of establishing a holding company between the investors and the operating companies was to enable greater flexibility in the group’s financial leverage strategy, either by means of new capitalizations or indebtedness, as well as to allow the investors to decide on investments in other companies via the same vehicle.
At the time of HIP’s incorporation, its shareholders were HTPA with 99.99% of the capital stock and Central de Tratamento de Resíduos Nova Iguaçu S.A. with 0.01%. In December 2009, HIP incorporated all the shares of HTPA and, as a result, this company became a wholly owned subsidiary of the Company. As a result of the merger, HIP became the holding company of the partners who had investments in HTPA. Concurrently and on the same date, HIP assumed HTPA’s debts with the economic group’s main creditors.
As at December 31, 2009, HIP had five shareholders: SH1000 Participações S.A., the holding company whose main shareholder was Mr. Paulo Mancuso Tupinambá; InfraBrasil Fundo de Investimentos e Participações, which at the time was managed by Banco Santander (Brasil) S.A. (“Santander”) and which had been a shareholder since 2007; Fundo de Investimentos em Participações Multisetorial Plus, which was managed by Banco Bradesco S.A. (“Multisetorial”) and which had been a shareholder since 2008; and the minority shareholders SGRP Empreendimento e Participações S.A. and Pro Ambiente Gerenciamento e Projetos Ltda.
Later on, beginning on August 13, 2010, HIP’s capital stock also included Fundo de Investimento em Participações Caixa Ambiental, which at the time was also managed by Santander.
[...] “the organic and inorganic growth of the group that aimed to be a leader in environmental solutions in Brazil” [...]
The capital contributions from private equity funds in HTPA, later consolidated in HIP, enabled the organic and inorganic growth of the group, whose goal was to be a leader in environmental solutions in Brazil, carrying out a number of activities, such as: (a) water and effluent treatment, (b) waste treatment and disposal, (c) environmental engineering and forestry services, and (d) manufacturing equipment for water and effluent treatment.
The period between 2007 and 2010 was marked by transactions in the various segments in which the group operates, with highlight going to the following acquisitions:
|(I)||a company whose main activities are projects, implementation, operation and management of collection, adduction, distribution, treatment and reuse of water and sewage systems and related activities, as well as providing artesian wells drilling, construction and maintenance services and supplying water as a utility concessionaire or permissionaire;|
|(II)||B.O.T (build, operate and transfer) service agreements for the construction, implementation, operation, technical assistance and maintenance of autonomous deep tube well water supply systems;|
|(III)||A plant located in the city of Itu, in the State of São Paulo that manufactures systems for water and effluent treatment projects;|
|(IV)||A final waste disposal division with assets located predominantly in the State of Rio de Janeiro; and|
|(V)||An industrial effluent treatment unit located in the municipality of Santa Cruz, State of Rio de Janeiro.|
In addition to growth through acquisitions, the Company signed a number of new contracts and expanded its activities organically in all of its businesses.
In 2010 and 2011, after failing to achieve the expected synergies and accumulating negative operating results, HIP went looking for new shareholders who would be willing to capitalize the Company and take over the management of the business.
In March 2013, in a transaction that involved the contribution of assets and capitalization by a majority of shareholders, Inovatec Participações S.A. (“Inovatec”) became HIP’s majority shareholder with 59.3% of its capital stock.
The change in HIP’s shareholders came hand in hand with a change in the Company’s business focus, under which the Company’s only goal would be its positioning in the treatment and final disposal of hazardous and non-hazardous waste with a bias towards adding value to the treated waste, as well as environmental services.
Since 2013, the Company has been marked by the sale of non-core business, strengthening its core activities, which are the treatment and final disposal of hazardous and non-hazardous waste, reducing costs and increasing prices charged, implementing biogas exploitation activities and energy generation in landfills, and financial restructuring.
In the area of M&A transactions, we can highlight the sale of the activities of the former companies Geoplan, Hidrogesp, Gaiapan and Tribel, as well as the end of the former Aquamec’s activities.
In the waste treatment and final disposal business, the Company acquired 66.7% of the landfill in João Pessoa, in the State of Paraíba, the entire transshipment of the municipality of Duque de Caxias, in the State of Rio de Janeiro, and of Ecopesa Ambiental S.A., the main landfill in the country’s Northeast region, located in the metropolitan region of Recife, in the State of Pernambuco, as well as selling its stake in the concession of the municipality of Rio de Janeiro in 2016.
The Company, through its subsidiaries, has initiated the exploitation of biogas and electricity generation at all of its landfills, which currently have an installed capacity equivalent to 56 MW of energy, either through biogas sales contracts or thermal power plants where its companies act as consortium members.
[...] “The efforts made to develop carbon credit projects are also worth highlighting” [...] “is expected to generate 3 million tons of carbon equivalent from its five current landfills” [...]
The efforts made to develop carbon credit projects are also worth highlighting. The landfill in the municipality of Nova Iguaçu, in the State of Rio de Janeiro, housed the world’s first Clean Development Mechanism project, and the Company expects to generate 3 million tons of carbon equivalent from its five current landfills. The company has recently signed important contracts with the World Bank and the Swiss government.
With regard to waste processing and waste-to-energy initiatives, the company has signed a joint venture for the processing of steel fines in Volta Redonda, in the State of Rio de Janeiro, expanded its client portfolio at the Magé plant, in the State of Rio de Janeiro, and focused all its efforts on the implementation of the first waste-to-energy plant in Latin America, in a public-private partnership in Barueri, in the metropolitan region of São Paulo.
On the corporate level, it is worth noting that, since mid-2019, the Company has carried out some corporate restructurings that resulted in an increase in Inovatec’s equity interest with the reduction of SH1000’s stake and divestiture of Multisetorial.
Moreover, on October 28, 2020, the shareholders Infrabrasil Fundo de Investimento em Participações and Fundo de Investimento em Participações Caixa Ambiental sold their respective equity interests in the Company to Spectra Portinari Fundo de Investimento em Participações Multiestratégia. For more information about the changes in the Company’s corporate structure, see item 15.7 of this Reference Form.
With regard to regulatory changes and alterations in the scenario that impact the Company’s business, it is worth highlighting:
The Sanitation Legal Framework of July 15, 2020, which, among other things, reinforced the obligations and extended the deadlines of the National Solid Waste Policy for cities to properly dispose of their waste (envisaging the closure of landfills by 2024), and guaranteed the economic and financial sustainability of urban cleaning and solid waste management services by means of the mandatory creation of fees, tariffs or other public prices by local governments, under penalty of being characterized as revenue waiver by the municipality and specific penalties.
Still on the regulatory issue, the federal government has indicated the waste-to-energy solution as one of the viable alternatives for those regions where there are no areas available for landfill sites.