UXC to sell divisions, write off $7 million after Government scraps Green Start scheme

Green loans operator UXC says it has been forced to divest two elements of its environmental business after the Government announced last month it would scrap the new Green Start program that was designed to take over from the bungled Green Loans scheme.

Managing director Cris Nicolli says the company is “very disappointed” in the Government’s decision, and that it will incur some financial losses as a result. Both the environment services business and the retail services division will be sold off.

“We were hoping that the Government program would roll out and reinvigorate everything, which was the plan, but of course this announcement is very disappointing.”

“We’ve invested heavily in the environmental savings sector and to have it put on hold, or cancelled, is very disappointing. It’s not a huge cost to us but there is definitely a cost in having set up all this different infrastructure.”

Yesterday UXC, which was one of the largest green loans operators, announced in a statement that it would be divesting both units and is on the lookout for buyers.

“The recent decision by the Federal Government… is very disappointing and highlights the significant risks associated with government environmental programs,” the statement read.

“This removes current and planned services that were seen as having strong earnings potential for UXC in the second half of 2010-11 and into 2011-12. As a consequence, the infrastructure built to support a much larger environmental services organisation must be exited.”

Nicolli says the company is currently searching for buyers, and that the write-downs to be made as a result of the sales will be “in the order of some $7 million”.

But Nicolli says these write-downs are only a fraction of the losses these businesses contributed during the previous financial year, and argues making the write-downs now is preferable to any ongoing losses.

“This will impact our financials because Green Start was a program that was expected to run for up to 24 months,” he says.

“But I don’t think it’s going to have a big impact… we will be able to maintain our revenue.”

Last month the Government cancelled the upcoming Green Start program after deciding that it would be too risky to continue with. The previous program was rife with corruption and other problems, but its cancellation has left thousands of assessors without work. Many are now filing for millions of dollars in compensation.

Independent reviews also found there was evidence that government employees were not obeying strict rules relating to the assessment program.