(Yicai Global) May 6 -- Shares in China Tianying soared nearly 10 percent today after the Chinese municipal solid waste disposal firm said it is in talks to sell a controlling stake in its Spanish unit Urbaser to raise much needed capital.

China Tianying's share price [SHE:000035] closed up 6.71 percent today at CNY4.45 (USD0.69). Earlier in the day it had reached CNY4.58.

The company is in extensive discussions with investors who have expressed interest in acquiring control of Urbaser, the world’s sixth-biggest urban solid waste collection firm, the Nantong, eastern Jiangsu province-based company said yesterday. No further details about the potential buyers nor the amounts involved were disclosed.

Tianying believes that ceding control of Urbaser, which serves 69 million people in over 30 cities worldwide, for a reasonable price is in line with company strategy and will protect the interests of minority shareholders, it said.

Tianying paid CNY8.9 billion (USD1.4 billion) for Madrid-based Urbaser in July 2018 in the biggest overseas acquisition ever made in China’s environment protection sector. However, the takeover added to the company’s huge debt burden. As of the end of last year, Tianying owed CNY37.9 billion (USD5.9 billion) and held assets worth CNY50.4 billion.

Urbaser, which handles 26 million tons of waste a year, has been a wise investment by Tianying. In 2020, it brought in EUR65.7 million (USD78.9 million) in profit and in 2019, EUR62.33 million. Last year, Tianying’s European operations accounted for 73 percent of the firm’s revenue at CNY15.9 billion.

By contrast, Tianying logged a 8.3 percent drop in profit last year from the year before to CNY650 million (USD100.3 million). Revenue, though, was up 17.7 percent to CNY21.9 billion.

Editor: Kim Taylor