Takeover target Ausdrill Ltd has upheld its rejection of Macmahon Holdings takeover offer as it enters into contracts potentially worth $US51 million ($A54.4m) in revenue.
Takeover target Ausdrill Ltd has upheld its rejection of Macmahon Holdings takeover offer as it enters into contracts potentially worth $US51 million ($A54.3 million) in revenue.
Ausdrill has received a number of letter of intent agreements for its services in Australia and Africa including a possible deal to sell its telecommunications division, Diamond Communications, to an unknown company.
While no dollar figure has been released on the potential transaction, there is a $10 million limit imposed by Macmahon in its bid conditions.
Ausdrill said that the limit is "unrealistically low given the scale of Ausdrill's operations".
It is understood that Macmahon can waive the condition.
Ausdrill said it had received a letter of intent from Yatela SA - a joint venture between AngloGold Ashanti, IAMGOLD and the Malian government - to award a negotiated mining contract for the Yatela project.
The initial contract, through Ausdrill's African subsidiary African Mining Services, is expected to generate around $US40 million in revenue over two and a half years.
Under a separate agreement, AMS will purchase the previous contractor's equipment and spares for approximately $US19 million.
Additionally, Ausdrill's wholly-owned subsidiary Ausdrill Mining Services Australia, received a letter of intent from the Fortescue Metals Group to hire ten 100-tonne Caterpillar dump trucks for a minimum period of six months.
In response to Ausdrill's statement Macmahon said: "We have noted the Ausdrill announcement and at this stage we have seen nothing to change our view that Macmahon's Offer is compelling and represents a great opportunity for the shareholders of both companies"
Macmahon Holdings is offering 1.45 shares for one Ausdrill share. Ausdrill Directors, who at present control 13.4%, have unanimously recommend shareholders reject the offer and intend to do the same in regard to their own shareholdings.
The offer remains open until 18 July 2008.
The Ausdrill announcement is pasted below:
AUSDRILL WINS IMPORTANT NEW CONTRACTS POTENTIAL TRANSACTION INVOLVING DIAMOND COMMUNICATIONS
Diversified mining and services company Ausdrill Limited (ASX code: ASL) announced today it has been awarded a number of valuable and important new contracts, particularly bolstering its successful African operations.
African Mining Services
Through its wholly-owned subsidiary African Mining Services (AMS), Ausdrill has received a letter of intent from Yatela SA, a joint venture between AngloGold Ashanti, IAMGOLD and the Malian Government, to award a negotiated mining contract for the Yatela Project in Mali, West Africa
The initial contract, which is expected to start July 1 this year, will generate approximately US$40 million in revenue over two and a half years.
Under a separate agreement, AMS will purchase the previous contractor's equipment and spares for approximately US$19 million. AMS will also take over most of the previous contractors' staff. AngloGold Ashanti, one of the largest mining companies in Africa, operates the mine.
Ausdrill Ltd Managing Director, Mr Ron Sayers, said that the contract was particularly significant, as it was the first contract that AMS has won in the very mature gold mining province of Mali.
"It is also the first contract that AMS has won with AngloGold Ashanti since Ausdrill acquired the remaining 50% of AMS from the Administrator of Henry Walker Eltin", Mr Sayers said.
"We are delighted to have won the opportunity to form a relationship with AngloGold Ashanti in Africa. The contract signifies the terrific opportunities for Ausdrill and its subsidiaries in Africa".
Ausdrill has also received a letter of intent through its 50% owned African Underground Mining Services (AUMS), a joint venture between AMS and Barminco Ltd, to award an initial 13-month US$11 million contract to advance the Strauss decline approximately 2 kilometres at Central African Gold Plc's Bibiani Mine in Ghana. Negotiations have commenced to extend the length of this contract.
This is the second contract awarded to AUMS in the past six months. The initial contract was for three-years, will generate US$62 million in revenue and was for the development of the Akwaaba underground project at Chirano for Redback Mining where AMS has a five-year contract for the mining of open pits. The company is also currently tendering on an underground production contract at Akwaaba which will commence in early 2009.
Ausdrill Mining Services
Also today, Ausdrill's wholly-owned subsidiary Ausdrill Mining Services Australia (AMSA), received a letter of intent from the Fortescue Metals Group to hire ten 100-tonne Caterpillar dump trucks for a minimum period of six months. This is a significant milestone for AMSA as it is the first major contract it has been awarded since acquiring its Australian contract mining fleet late last year. The contract complements Ausdrill's three year drill and blast contract with Fortescue Metals Group.
Mr Sayers also confirmed that in addition to the letters of intent for new contracts, Ausdrill has entered into discussions and negotiations for the possible sale of Diamond Communications. This division of Ausdrill's business specialises in the telecommunications cabling field and the installation of underground power cables.
"We are in discussions with a significant participant in that industry and if current negotiations are successful, the sale is expected to be earnings accretive for the year ended 30 June 2009."
"These are all extremely positive and exciting developments for the company and demonstrate that Ausdrill continues to be a leader in its key markets of Australia and Africa."
Potential Impact on Macmahon's Unsolicited Takeover Offer
Each of the transactions referred to above flows from discussions and negotiations entered into prior to the announcement of Macmahon's unsolicited takeover offer for Ausdrill.
Nevertheless, each transaction has the capacity to amount to a breach of condition 5.1(e) of Macmahon's offer.
The Ausdrill Board is clearly of the view that:
(a) there are clear commercial imperatives for Ausdrill in entering into the contracts;
(b) the A$10 million limit imposed by Macmahon in its bid conditions is unrealistically low given the scale of Ausdrill's operations;
(c) the contracts are entered into in the ordinary course of business and are not commercially critical to Macmahon's offer; and
(d) in any event Macmahon's offer is inadequate and the Board has unanimously recommended that shareholders reject the offer