ORH to acquire ResCo group

Belmont-based ORH has flagged a $23.5 million capital raising as part of a condition to acquire private mining services company ResCo.

Mining services company ORH today said it had signed a term sheet to acquire ResCo and related company Springsure Mining Pty Ltd, together known as the ResCo group.

ResCo has established operation across 11 locations in New South Wales and Queensland, and counts Rio Tinto, Anglo Group and Xstrata Coal as clients.

Revenue for the ResCo for the 2009 financial year totaled $122 million, and since that time, ORH said the company has been awarded a number of new contracts.

ORH said the acquisition will provide a range of synergies to both businesses, with ORH able to expand its business, particularly the engineering business, into NSW and Queensland, while ResCo will have a base in Western Australia.

Consideration for the acquisition, which is subject to due diligence, will be the issue of 369 million ordinary fully paid shares and ORH raising a minimum of $22 million, which will be primarily used to pay off debt across the ResCo group.

A further $1.5 million will be raised through a share purchase plan, with funds to be used as working capital.

ORH said that on completion of the acquisition, the company will be relocated to Newcastle and will initially be lead by current ResCo chief executive Geoff Fardell.

The combined entity's board will comprise of two representatives each from ORH and ResCo. Domenic Martino will continue as non-executive chairman, post acquisition.

Shares in ORH climbed 0.3 cents to 3.8c at 14:20 AEDT.