Private Welshpool company NRW has emerged as the surprise second bidder for Henry Walker Eltin’s contract mining business, after teaming up with HWE’s senior management team.
Private Welshpool company NRW has emerged as the surprise second bidder for Henry Walker Eltin’s contract mining business, after teaming up with HWE’s senior management team.
The NRW bid has won financial backing from the ANZ Bank and Stark Investments, a low-profile international investment fund that is expanding aggressively in Western Australia.
Stark has invested nearly $70 million in three WA companies this year and is one of three bidders for beef processor EG Green Group.
These transactions would be dwarfed by the bid for HWE’s contract mining arm, which has annual turnover of $600 million and 1,700 staff across 20 sites.
The bidding for HWE is understood to have come down to a two-way race between NRW and Leighton Holdings.
Industry sources have speculated that NRW will be well placed to win the business, given the desire of clients such as BHP Billiton to maintain a competitive market for contract mining.
Leighton is already a big player in the industry, through Leighton Contractors and its subsidiary Thiess.
Another Leighton subsidiary, John Holland, is also looking to establish a mining operation to take advantage of the sector’s rapid growth.
NRW was established in 1994 by Jeff McGlinn and John Silverthorne and has completed civil and mining projects for clients including Rio Tinto, BHP Billiton and Portman.
It has built up a fleet of more than 200 items of heavy earthmoving equipment.
WA Business News understands that HWE’s current management team, led by Perth-based Garret Dixon, would take equity in the business if the bid succeeds.
For financial afficianados, the transaction would be known as a ‘bimbo’ – a buy-in management buy-out.
HWE’s contract mining arm was the largest part of the HWE group, which went into administration early this year.
HWE’s administrators, McGrath-Nicol partners Joseph Hayes and Scott Kershaw, announced last month that preferred bidders for the business have commenced due diligence and a final decision on the sale was expected in weeks. They have already sold other parts of the HWE business, including Simon Engineering, the civil engineering arm and the Indonesian contract mining arm.
The bid for HWE would be Stark’s fourth major WA transaction this month.
US-based Stark teamed up with Singapore-based Harmony Capital to lodge a bid for EG Green Group.
Their joint bid was one of three, with the other bidders being Futuris subsidiary Elders and Victorian beef processor Tasman Group.
The Green family, which previously owned the business, submitted a conditional deed of company arrangement proposal.
The administrator of EG Green, Ferrier Hodgson partner Martin Jones, said all of the bids were subject to significant conditions.
Mr Jones said EG Green had total liabilities of $81.5 million, well above earlier estimates.
He estimated the return to unsecured creditors would be between 32 cents and 59 cents in the dollar, after paying the secured creditor (Elders) $19.7 million and priority creditors $9.5 million.
Stark keeps a very low profile. Its web site has just one page, which provides little more than a street address in Milwaukee, in the US, and a phone number.
The most revealing information was provided by ASX-listed Brandrill, which announced this week that Stark and Harmony each paid $5.1 million for a 19.9 per cent shareholding.
Brandrill said Stark is an international fund manager with $US7 billion (A$9.3 billion) in funds under management while Harmony is described as a Singapore-based fund with a focus on “turnaround investing”.
The Brandrill shares were acquired from another low-profile investor, London-based Mizuho International plc.
Mizuho rescued Brandrill from administration by subscribing for shares and convertible notes that gave it a 58 per cent stake.
It has now sold most of its shares to Stark and Harmony, but retained an 18 per cent holding.
Mizuho did not provide any reason for the sale, nor did it explain the recent decision to sell its holding of Chemeq convertible bonds.
Mizuho effectively saved the loss-making Chemeq from falling into administration when it agreed to subscribe for $60 million in convertible bonds in January.
It ended up investing jointly with Stark and has now sold all of its $30 million holding of convertible bonds to Stark.
Yet another transaction involving Stark and Mizuho was the establishment of Mediterranean Oil & Gas, an exploration and production company co-founded by veteran Perth entrepreneur Tony Trevisan.
Mizuho, Stark and Mr Trevisan’s Transcontinental Group were seed investors in the company, which is raising 11.5 million pounds ahead of a listing on the London Stock Exchange’s Alternative Investment Market.
