CMA announces Southern Rocycling acquisition plans

Perth-based scrap metal group CMA Corporation Ltd will acquire Victorian scrap metal recycling group Southern Rocycling through a share sale agreement, the company announced today.

CMA will fund the acquisition thhrough an underwritten rights issue to existing shareholders at a price of 32c per share.

The full text of a company announcement is pasted below

CMA Corporation Ltd today announced that it has entered into a Share Sale Agreement to acquire Victorian-based scrap metal recycling group Southern Rocycling.

Southern Rocycling has an annual turnover in excess of $75 million and specialises in the recycling and processing of various metals into value-added end products for Australian industry and specialised overseas markets.

The Share Sale Agreement is conditional and subject to completing due diligence, shareholder approval and finalising funding arrangements. CMA plans to fund the acquisition through an underwritten rights issue to existing shareholders at a price of $0.32 per share, which is calculated as a 15% discount to the weighted average price of trading in the company shares over a 20 day period prior to 17 January 2007.

CMA Managing Director Peter Hatfull said the acquisition was part of CMA's strategy to build a network of efficient and well run scrap metal operations throughout Australasia.

"We see this as an outstanding opportunity to take CMA to the next level in the Australian scrap sector," said Mr Hatfull.

"Southern Rocycling is a long-established, well-managed business with a stable and growing business base."

The acquisition is expected to be earnings accretive in its first full year of operation.

Southern Rocycling is one of the largest privately owned processors and recyclers of scrap and secondary metals in Australia, with plants in Melbourne, Sydney, Adelaide, Queensland, Tasmania and New Zealand. With Associates in Perth and Darwin, the merging of the two groups will ensure a strong presence in every state allowing the combined group to provide a substantial service nationwide.

Southern Rocycling is well respected and recognised as having a significant presence in the recycling industry, winning a number of industry awards for its environmentally friendly and socially responsible activities. It continues to build its impressive customer base around Australia, providing its clients with a complete innovative package for the handling and disposal of their scrap metal arisings.

Further details of the acquisition - including pricing and details of the rights issue - will be released once the due diligence and financing arrangements are completed.