After operating as a private company for 14 years, mining services firm ADG Global Supply Pty Ltd is planning a stock market listing to bring in new money and attract new talent for its growing business.
After operating as a private company for 14 years, mining services firm ADG Global Supply Pty Ltd is planning a stock market listing to bring in new money and attract new talent for its growing business.
ADG is planning a backdoor listing through a merger with listed pumping equipment supplier Australian Waterwise Solutions Ltd (AWS).
This contrasts with other mining services and contracting firms, such as Swick Mining Services Ltd, NRW Holdings Ltd, Brierty Ltd and Southern Cross Electrical Engineering Ltd, which have opted for an initial public offering ahead of their stock market listing.
AWS shareholders are due to vote this week on the merger, which will rename the combined entity ADG Global Supply Ltd.
The merger is also a turning point for AWS, which came out of administration in December last year following a decline in its financial position, during which it was forced to sell its core Hugall & Hoile irrigation business and other strategic assets.
AWS retained its wholesale pumps distribution business, RainOne, which will be marketed to more than 30 countries where ADG already has a presence following the merger.
Founded in 1994 by chief executive Andy Greathead, ADG has grown to become a global supplier of consumables, spare parts, equipment and services to the mining, oil, and gas industries, and includes mining giants BHP Billiton, Rio Tinto, and AngloGold Ashanti among its clientele.
The company’s revenue for fiscal 2007 reached $48.4 million with normalised earnings before interest and tax (EBIT) of $4 million, according to a prospectus issued by AWS for an $8.5 million share issue.
During the six months to the end of December 2007, revenue was reported as $26 million and EBIT recorded at $1.24 million.
The AWS capital raising will be used to partially fund its purchase of ADG, for which it is paying $16.85 million in cash and shares.
Mr Greathead said entering the public domain had been part of ADG’s plan for the past few years.
“[AWS] effectively have a shell listed on the ASX that has existing business within, and would benefit from additional business and the opportunity to sell its products into a broader market, which ADG Global Supply brings,” Mr Greathead told WA Business News.
“It’s a good marriage of convenience; we both bring slightly different benefits to the merger.”
ADG’s listing on the stock market will make it easier for the company to raise additional capital for future growth.
Mr Greathead said the merger would also provide further opportunities for ADG’s employees.
“It’s an opportunity to get some additional funds but also to get some additional smarts or brains on board...and enables us to share the excitement of future growth with our employees who can come on board as shareholders,” he said.
“We’ll be pursuing our plans to continue to build our market share with various products that we represent, and we’ll also be pressing ahead with investment strategies that we have in place to grow our representative footprint, expanding into new regions and new countries.”
The merged entity is forecast to achieve a profit after income tax for continued operations for fiscal 2009 of $3.5 million.
Following the merger, Mr Greathead will become CEO and managing director, while current AWS chief executive Simon Lyons will step down.
