Privately owned Perth company CFC Group is set to substantially expand its operations after agreeing to purchase Cape Crushing and Earthmoving Contractors from VDM Group for up to $53 million.
The deal comprises an up-front payment of $48 million and a further payment of up to $5 million, subject to Cape meeting “financial benchmarks” in the current financial year.
It is part of the long-running restructuring and recapitalisation of VDM Group, and is subject to VDM shareholder approval in Q3 of FY2012.
Cape Crushing and Earthmoving generated about $66 million in revenue last financial year, according to VDM.
It will join CFC Group’s three existing businesses – trucking and logistics operator Centurion, utilities contractor Underground Services, and construction and agricultural equipment distributor JCB Construction Equipment Australia.
VDM Group chief executive Andrew Broad said proceeds from the sale would substantially strengthen the company’s balance sheet.
“Following a strategic review of our operations undertaken during the recent capital raising process, Cape was identified as a business unit which fell outside of our core strategy,” Mr Broad said.
“Selling Cape leaves VDM well placed to focus on the divisions which are closely in line with our design and construct business model.
“Furthermore, the sale proceeds will be used to eliminate virtually all of the Company’s debt and provide up to $28 million injection to working capital, allowing us to further capitalise on the continued upswing in construction contracts awarded in the resources and oil & gas sectors.”
CFC Group executive chairman Philip Cardaci “during the course of our business we identified Cape Crushing as a company that aligns closely with the CFC Group in many respects”.
“They share the same ‘safety first’ culture that we are intent on building. They strive every day to provide their clients, mainly in the resources sector, a valued, safe service and most importantly our company values are also aligned.
“We were just waiting for the right opportunity to make an approach to the Cape team to see how we could work more closely together and those discussions have resulted in us asking them to join our team.”
Cape Crushing founder and managing director Mike Heddon said “this transaction reinforces our commitment to the Western Australian market and in particular the mining services industry”.
“Our entire management team view this as an opportunity to increase our value to clients and we are one hundred percent behind the deal.”
