Southern Cross to launch $59m IPO

Another long-established mining services player is taking the leap on to the Australian stock market, with Southern Cross Electrical Engineering Ltd embarking on a $58.8 million capital raising next week.

Founded by Frank Tomasi in 1978, Southern Cross Electrical supplies large-scale electrical and instrumentation installation services for major resource and construction projects.

A prospectus for its initial public offering is expected to be lodged with the Australian Securities and Investments Commission this week to raise $58.8 million via the issue of 58.8 million shares priced at $1 each.

There will be 120 million shares on issue, with Mr Tomasi retaining the remaining 51 per stake in the company.

Euroz Securities Ltd is managing the transaction, which is fully underwritten.

Southern Cross Electrical is expecting to post a net profit after tax for 2007-08 of $12.2 million and generate earnings before interest, tax, depreciation and amortisation of $18.5 million and earnings before interest and tax of $17.5 million.

The offer is expected to open on November 7 and will close on November 16.

Mr Tomasi, currently chief executive officer and executive director, will take the role as the company’s executive chairman following its listing.

Its board will comprise its existing structure, which includes Clough Ltd non-executive director and previous chief executive officer John Cooper as well as former Southern Cross Electrical managing director Brian Carman, and construction industry executive Douglas Fargher.

While predominantly working in Western Australia, Southern Cross Electrical has offices in the US and works in New Zealand, Tanzania and Ghana and specialises in remote locations.

Southern Cross Electrical’s move to the public arena follows mining contractor NRW’s successful $303 million float, and comes almost a year after drilling company Swick Mining Services entered the public domain after raising $4 million from investors by issuing shares at 20 cents each.

Swick shares this week approached the $2 mark, offering investors an 850 per cent premium on its issue price.

Investors that purchased $2 shares in NRW’s initial public offering in August were this week sitting on a 62 per cent premium as the mining contractor’s shares trading at $3.24.