24/04/2009 - 15:33

Coote, Greentrains in equity deal

24/04/2009 - 15:33

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Maddington company Coote Industrial Ltd and associated company Greentrains Ltd have negotiated related fund raising deals worth $8 million with Victorian Caterpillar dealer Dale Elphinstone.

Maddington company Coote Industrial Ltd and associated company Greentrains Ltd have negotiated related fund raising deals worth $8 million with Victorian Caterpillar dealer Dale Elphinstone.

The deal is part of efforts by Greentrains to refinance its $75 million debt, which was largely incurred when it purchased railway rolling stock from Coote subsidiary Gemco.

Coote managing director Mike Coote told WA Business News Greentrains needed to raise $15 million in equity which was a pre-condition for refinancing its debt.

So far Greentrains has locked in $11.5 million, with $6.5 million from today's placement of shares to Mr Elphinstone's company Elph Pty Ltd and $5 million in covertible notes subscribed by Orange Grove Brickworks Pty Ltd, a company owned by Mr Coote's parents.

"They need the equity to refinance the debt," Mr Coote said.

"That will allow the debt to flow."

Greentrains' refinancing strategy includes working towards an ASX listing. To that end, it recently converted from a Pty Ltd company to a public company.

Repayment of the Greentrains debt is a key strategy for Coote, as it currently precludes progress on a number of other growth objectives.

Elph will pay $1 each for the 6.5 million Greentrains shares and will also subscribe to 6.5 million Coote shares at 20 cents each, for a total cost of $1.3 million.

Elph is a member of the Elphinstone Group of companies controlled by Dale Elphinstone. The group operates the Caterpillar dealershgips in Victoria and Tasmania, while Mr Elphinstone sits on the board of National Hire Group along with John Langoulant, Richard Court and Peter Gammell.

Coote said the fresh equity for Greentrains is part of that company's larger debt and equity fundraising activities.

Shares in Coote closed down 2.5 cents to 30 cents today.

 

 

 

The annoncement is below:

 

 

The directors of Coote Industrial Limited ("Coote") are pleased to announce the placement of 6,500,000 fully paid ordinary shares to Elph Pty Ltd ("Elph"). The shares will be issued at a price of 20 cents per share which will raise A$1.3 million.

The placement is made pursuant to the excluded offer provisions of Section 708 of the Corporations Act 2001 and in accordance with Listing Rule 7.1 of the ASX Listing Rules. The placement is not subject to shareholder approval.

The capital raising has been undertaken in parallel with Greentrains Limited ("Greentrains") where, in addition to the Coote share placement, Elph has also agreed to take a placement of 6,500,000 fully paid ordinary shares in Greentrains at $1.00 per share to raise A$6.5 million of new equity as part of a larger debt and equity fundraising being undertaken by Greentrains. Coote's participation has been pivotal in securing the support of Elph to the agreement with Greentrains which has been negotiated over the last few weeks.

The commitment of fresh equity into Greentrains by Elph represents a major step towards the completion of the recapitalization of the Greentrains business which, when finalised, will also deliver a significant benefit to Coote and its shareholders by enabling Greentrains to make a substantial reduction in its liability to Coote.

The funds raised by the placement to Elph by Coote will be used for working capital.

About Elph Pty Ltd

Elph is a member of the Elphinstone Group of companies which is controlled by Mr Dale Elphinstone. Among other things, the Group operates the Caterpillar equipment dealerships in Victoria and Tasmania through its William Adams subsidiary and also has other business interests in Australia and New Zealand. Dale Elphinstone is also a non-executive director of ASX listed company National Hire Group Limited, in which the Elphinstone Group holds a substantial interest.

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