Henderson-based drill and blast company Brandrill Ltd will go on an acquisition drive, acquiring the exploration drilling arm of Kalgoorlie-based Strange Drilling and a stake in a haul truck lightweight tray business for $30 million.
Henderson-based drill and blast company Brandrill Ltd will go on an acquisition drive, acquiring the exploration drilling arm of Kalgoorlie-based Strange Drilling and a stake in a haul truck lightweight tray business for $30 million.
Brandrill will acquire Strange Drilling's exploration drilling business and the drilling rig hire business of Strange Investments for $26 million, which will include eight drill rigs and its Kalgoorlie operating base.
Brandrill will also acquire a 70 per cent stake of Forrestfield-based DT Hi-Load Australia Pty Ltd from its Chilean parent company for around $3.4 million.
The total transaction amount of $30 million is to be funded from a placement of 47.79 million shares at 25 cents each to major shareholders and clients of Euroz Securities and a Shareholder Purchase Plan limited to 12 million shares also at $0.25 per share to raise a combined $15 million (before costs). The remaining funds will come from equipment financing and existing working capital.
The full text of a company announcement is pasted below
Major drill and blast contractor Brandrill Limited is acquiring the Strange Drilling exploration drilling arm and the DT-Hi Load haul truck lightweight tray manufacturing business as an important step in its further growth and diversification strategy.
Exploration Drilling
Brandrill has entered into agreements to acquire the exploration drilling business of Strange Drilling, and to acquire the drilling rig hire business of Strange Investments. These acquisitions include eight RC drill rigs, an operating base in Kalgoorlie and an experienced staff of 25.
The majority of Strange Drilling's contracts are long term resource definition contracts with reputable clients, all in Western Australia. The exploration business is expected to add approximately $16 million per annum to Brandrill's turnover and contribute approximately $4-5 million in EBITA on an annualised basis.The total acquisition cost is $26 million with $22 million payable in late July and $4 million payable in November 2007.
Haul Truck Tray Investment
Brandrill is also to acquire a 70% interest in the haul truck lightweight tray business, DT-Hi Load Australia for US$3.0 million from the existing Chilean parent company DTSA. DT-Hi Load Australia is the Australian subsidiary based in Perth and has a staff of 22.
DT- Hi Load haul truck lightweight trays are of a patented design and have been sold predominantly in South America since 1996. Today, there are over 700 trays in operation world wide on a variety of OEM trucks. Due to their lightweight construction, the trays allow 10-15% more carrying capacity for haul trucks with additional fuel and tyre savings and are increasingly gaining acceptance from the Australian resource sector. DT-Hi Load is expected to turnover $20 million in 2007-08 and contribute $4-5 million in EBITA (on a 100% basis). Brandrill believes there is strong growth potential in Australia and also in the Asia/Pacific region.
In announcing the two acquisitions, Ken Perry, Brandrill Limited Managing Director commented:
"Brandrill is pleased to announce these acquisitions which will play an important part in our growth and diversification strategy. Both investments will be earnings accretive and being in our broad sector will benefit from operating and strategic synergies with Brandrill's core business. We are confident that they will continue to add new sources of growth in earnings for Brandrill while delivering an increased range of services to our existing blast hole drilling clients".
The total transaction amount of $30 million is to be funded from a placement of 47.79 million shares at $0.25 per share to institutions and professional investors and a Shareholder Purchase Plan limited to 12.0 million shares also at $0.25 per share to raise a combined $15 million (before costs). The remaining funds will come from equipment financing and existing working capital.
The placement of 47.79 million shares has been completed at a price of $0.25/share to existing major shareholders and clients of Euroz Securities. The Shareholder Purchase Plan will shortly be mailed to shareholders. In the event of oversubscriptions, Brandrill will scale back applications.
