SHANKS Group, the waste management specialist, will offload materials recycling facilities (MRFs) in Edinburgh and Aberdeen after agreeing to sell the majority of its loss-making solid waste business to Biffa.

The company is selling 11 sites, as well as collection fleets and transfer stations in Scotland and south of the Border, to Biffa for an initial cash consideration of £9.5 million. Some 300 staff have transferred to Biffa under TUPE (transfer of undertakings - protection of employment).

Shanks is also in talks to offload its MRFs at Blochairn in Glasgow and Kettering as it stages its exit from solid waste operations in the UK.

However, it will retain its profitable facility at Elstow, which serves municipal customers in Bedfordshire.

In the firm's most recent results, the discontinued assets, which comprise the assets sold to Biffa plus Blochairn and Kettering, sustained a loss of £3.6m for the year to March 31, 2013 on revenue of £55.4m.

Peter Dilnot, group chief executive at Shanks, said: "These transactions deliver on our strategy of focusing in markets where we have a sustainable competitive advantage and can generate attractive returns.

"We are exiting a market where we are sub-scale and not positioned to win, and focusing our UK operations on our growing municipal and organics businesses."

The Biffa deal, coupled with the sale of Shanks's MRFs in Blochairn and Kettering, will bring the company net cash proceeds of about £14 million - £8m from Biffa and £6m from Blochairn and Kettering.

Shanks, which plans to use the proceeds to fund investment in growth markets and cut borrowings, said the disposal of assets to Biffa will bring a £3m uplift in underlying profits before tax.

But it said the disposal of assets to Biffa will lead to a loss on disposal of £11m, which will be presented as discontinued activities in its results. It also said it will take an impairment charge against Kettering of about £14m.

Shares in Shanks Group closed up 2.75p at 97.50p.