Emeco deal finally gets approval

Heavy equipment supplier Emeco Holdings has turned its focus to completing its merger with east coast companies Orionstone and Andy’s Earthmoving after noteholders backed a complex balance sheet restructuring today.

US-based investment group Black Diamond Capital Management, which voted against the restructure at scheme meetings in December, has emerged as a big supporter.

Black Diamond will emerge with about a 30 per cent shareholding, after converting its notes to equity and sub-underwriting a $20 million rights issue, and will have a director on Emeco’s board.

"Black Diamond believes that Emeco’s recapitalisation and merger with Andy’s and Orionstone creates a compelling platform for growth and clear value creation opportunities, demonstrated by our underwriting the pro rata rights issue and our substantial shareholding in the company,” executive Les Meier said in a statement.

Emeco managing director Ian Testrow  said Black Diamond was very supportive, despite its earlier opposition to the restructuring.

“Sometimes who you go through a bit of a rough time, you can build a relationship on that,” Mr Testrow told Business News.

“You can meet these challenges and turn them into a positive, and I believe we have done that.”

One hundred per cent of noteholders voted in favour of the restructuring scheme at a meeting held this morning in Sydney.

Shortly after, shareholders voted strongly in favour.

Mr Testrow said integration planning with Orionstone and Andy’s was well advanced.

“We have worked particularly hard in the last quarter on integration planning,” he said.

“The structure is set and ready to go.”

Mr Testrow said throughout the long restructuring process, Emeco’s management had continued to focus on its operations.

“We have a really deep management team,” he said.

Mr Testrow said the group’s strong first-half results showed the management team had not been distracted by the merger.

He emphasised that operating utilisation of its equipment in Australia jumped to 58 per cent in the month of February, up from an average of 53 per cent in the half-year to December.

Mr Testrow said this reflected the benefits of the commodity upturn, particualtly on the east coast.

Emeco’s shares closed 0.5 cents higher at 8.1 cents today.