Henderson-based drill and blast company Brandrill Ltd has completed the acquisition of a 70 per cent stake in truck trays manufacturer DT-Hi Load Australia Pty Ltd for around $3.4 million.
Henderson-based drill and blast company Brandrill Ltd has completed the acquisition of a 70 per cent stake in truck trays manufacturer DT-Hi Load Australia Pty Ltd for around $3.4 million.
The full text of a company announcement is pasted below
Brandrill has completed the acquisition of a 70% interest in DT-Hi Load Australia Pty Ltd (DTA).
DTA manufactures innovative haul truck lightweight trays of a patented design at its factory based in Forrestfield, Western Australia. Worldwide there are over 700 trays in operation on a wide variety of OEM trucks. To date these bodies have predominantly been manufactured by DTA's Chilean based shareholder Desarrollos Technologicos S.A (DTSA).
Brandrill has paid US$3.0 million (A$3.4 million) to acquire 70% of the issued capital of DTA. DTSA retains 10% of the issued capital, and the Australian based Managing Director, Mr John de Jager, continues to hold the remaining 20%.
Significant features of the acquisition include:
- An exclusive Licence to manufacture and sell DT-Hi Load bodies in Australia, Indonesia and China, together with other Asian / Pacific territories.
- A royalty payment on bodies manufactured within the licensed territories. To date components are cut and bent in Chile and kit assembly is completed in Australia. It is the intention in the short to medium term to relocate all facets of manufacture to Australia, and the royalty arrangements will commence from this time.
- An ongoing Supply Agreement with DTSA in Chile for the provision of components from DTSA until full manufacture is established in Australia.
- An option over DTSA's residual equity of 10% for a period of 1 year which may be exercised by Brandrill at a cost of US $1.5 million.
The Managing Director of DTA, Mr John de Jager, has a 3 year put option to Brandrill for his 20% holding in DTA at the same value per share as the price paid for Brandrill for its initial interest in DTA.
The shareholders of DTA have entered into a Shareholders Agreement. Consistent with the nature of such agreements, the shareholders hold pre-emptive rights at market value, including where a change in control in Brandrill occurs.
The Balance Sheet of DTA at the time of acquisition is expected to reflect a net liability of approximately $3.0 million, reflecting historical costs incurred by DTA in establishing the Australian business since July 2003. This will be consolidated in Brandrill Group accounts.
Brandrill will continue to provide working capital funding to DTA, under a secured loan agreement, to support the continuing rapid expansion of the business in Australia. The peak funding requirements, to service current orders immediately post acquisition, will be in the order of $10 million. This balance is projected to be reduced to $5 million by December 2007 and progressively thereafter.
DT-Hi Load has continued to receive strong sales enquiries and Brandrill is optimistic for the future of this exciting business. There are firm orders for 70 truck bodies for delivery with revenues committed of $13.5 million, most of which will occur in the next six months, underpinning expected revenues in excess of $20 million for the year. As such the investment should be strongly accretive to Brandrill earnings per share.
