02/04/2014 - 10:24

Resource Equipment plans $9m raising

02/04/2014 - 10:24

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Resource Equipment has announced plans to raise up to $8.8 million through a share placement to a consortium of investors with experience in the equipment rental and water management industries.

Resource Equipment plans $9m raising
Resource Equipment supplys a wide range of equipment to the mining sector, including assisted evaporation systems.

Resource Equipment has announced plans to raise up to $8.8 million through a share placement to a consortium of investors with experience in the equipment rental and water management industries.

The company told the market late yesterday that it will issue the Carosti Investments consortium with 37.6 million shares at 14 cents each, a solid increase on the company's closing price yesterday of 12.5 cents.

Resource Equipment also plans to issue an additional 25 million shares to raise a further $3.5 million, subject to obtaining shareholder approval to refresh the number of shares the company is able to issue within the subsequent 12-month period.

This would lift Carosti Investments' stake in the company to 19.9 per cent.

The consortium's shareholders include National Hire founder Stephen Donnelley, former National Hire managing director Andrew Aitken, and Ostwald Bros chief executive Brendan Ostwald

It also includes a fund managed by MH Carnegie & Co, a private equity manager founded by prominent investor Mark Carnegie

Mr Donnelley will be appointed to Resource Equipment's board following completion of the initial placement.

Resource Equipment chief executive James Cullen said the investment would bring significant industry contacts, strategic benefits and opportunities to the company.

"We look forward to working with a group of like-minded investors committed to delivering on a strategy to build a significant Australian water management business," he said.

"They are prepared to invest at a price above market at a time when mining services businesses are out of favour. Collectively we feel there will be opportunities that emerge from the current difficult market conditions and this investment will bolster our balance sheet and assist in funding such opportunities."

The company's shares were trading 16 per cent higher at 14.5 cents at 10:20am WST.

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