13/08/2009 - 13:17

Investment firm proposes bid for Emeco

13/08/2009 - 13:17

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West Perth-based mining services company Emeco Holdings says it has received a takeover proposal from an unnamed financial investment firm.

West Perth-based mining services company Emeco Holdings says it has received a takeover proposal from an unnamed financial investment firm.

In a market update today, Emeco said the non-binding proposal is preliminary and incomplete and "shareholders are advised that this approach may or may not lead to a formal proposal".

"The Emeco board will consider any offer or proposal it receives having regard to all alternatives available to the company," it said.

It added that it has yet to talk to the suitor.

Emeco said it has retained investment bank UBS and law firm Baker & McKenzie to assist with the proposal.

Before its 2006 listing on the Australian stock exchange, Emeco was owned by two investment firms, Archer Capital and Pacific Equity Partners.

Around half of the funds from Emeco's $1.1 billion initial public offer were used to buy the shares from both firms, reducing their stake to a combined 10.4 per cent before the float.

Archer and Pacific bought Emeco from US company Darr Equipment for $500 million in 2004.

Meantime the company has narrowed its full-year profit expectations to between $57 million and $58 million, before restructuring and impairment charges.

In May, Emeco said it expected its 2009 financial year net profit to fall 15 per cent from the previous year to between $56 million and $60 million.

In a statement today, Emeco outlined its restructuring and impairment charges, which total $45 million.

Emeco said it expected a $27 million hit from a decision to materially downsize its European operations.

Emeco also expects further impairment charges of $17.6 million due to the global financial crisis and the affect that has had on its North American business.

In the US, Emeco has estimated an impairment of goodwill and tax assets and a write-down of inventory of $13.4 million and $4.2 million in Canada.

Of the total $45 million impairment and restructuring charge, $43 million of the write down is of a non-cash nature, Emeco said.

Emeco also expects an annual operating cash flow of $175 million while net debt has been reduced to $331 million.

The company will release its full-year results on August 26.

Shares in Emeco were up six cents to 83.5c at 15:20 AEST.

More to come....

 

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