01/02/2011 - 15:54

Neptune restructures to return to profit

01/02/2011 - 15:54

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Neptune Marine says a review of its operational and financial structure has set a platform for a return to profit, following the lodgement of its prospectus for an $80.6 million capital raising.

Neptune restructures to return to profit

Neptune Marine says a review of its operational and financial structure has set a platform for a return to profit, following the lodgement of its prospectus for an $80.6 million capital raising.

Neptune said the review, which was undertaken by Pricewaterhouse Coopers, would result in annual overhead savings of nearly $9.5 million, while non-core businesses or assets would be sold off to remove $2 million to $4 million of losses.

A major plank of the restructuring plans is the $80.6 million capital raising, which will see Neptune shares offered at 5 cents a share.

Neptune originally flagged a three-for-one rights issue at 6 cents per share, when it announced equity raising plans in November.

Neptune said the new pricing was set to align more closely with post capital raising pro forma net tangible assets per share.

Proceeds from the raising will be used to reduce debt and meet deferred payments to vendors of businesses acquired by Neptune.

The company needs to raise at least $60 million to avoid collapse.

Also under the restructure, Neptune will sell its United States-based diving business and rationalise its operations in the United Kingdom.

Neptune said it also wrote down asset values by $99.5 million, and would appoint two new non-executive directors with significant industry experience.

Neptune acting chief executive Robin King said the wide-ranging changes put Neptune on a strong operational footing to deliver on the objective of restoring profitability and shareholder value.

"This is essentially a return to basics for Neptune, focusing on the strong parts of our business and rationalising those that do not meet the standards we require," Mr King said.

"Our objective is to create a platform that delivers to shareholders a strong, profitable business that is properly funded and that can achieve sustainable earnings growth."

Mr King said that Neptune's trading performance has stabilised over the past three months on the back of a number of significant new contracts.

"An example of work recently awarded is the $9 million contract with BHP Billiton Iron Ore for inspection and maintenance services at its Finucane Island facility in WA's Pilbara region, which we announced earlier this month and on which work has already started," he said.

"These changes and the balance sheet impact of the re-capitalisation are focused on returning Neptune to profitability."

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