Emeco acquires Pit N Portal for $72m
Business News, Jessica Mascione, Wednesday, 29 January 2020, © Copyright 2020 Business News Pty Ltd.
Emeco Holdings has expanded its service offering after signing a $72 million agreement to acquire Australian underground mining equipment and services provider, Pit N Portal.
As part of the acquisition, Emeco will pay $62 million in cash up front, funded by a capital raising, and will issue a further $10 million worth of company shares to the vendors.
Azure Capital and Goldman Sachs are acting as financial advisers to the acquisition.
Emeco managing director Ian Testrow said the purchase would allow the company to leverage its current core capabilities and expand into a new market.
“The underground mining sector is undoubtedly growing and this represents an attractive adjacency for Emeco, providing Emeco with a solid platform for growth,” Mr Testrow said.
“Pit N Portal also provides us with significant commodity diversification by immediately more than doubling our gold exposure with strong opportunities for further growth in hard rock projects.”
Emeco said the acquisition will increase its revenue from gold exposure from 12 per cent to 27 per cent and provide the company with longer tenure contracts, as well as operational advantages from Pit N Portal’s workshops in Perth and Kalgoorlie.
Pit N Portal chief executive Steve Versteegan will remain with the business in the combined group.
“I believe the combination of the two companies will help accelerate the growth of Pit N Portal and am excited by the opportunity to extend the application of what we do to the broader Emeco business,” Mr Versteegan said.
Established in 2002, Pit N Portal’s core operations include hard-rock underground mining equipment hire and maintenance services.
To fund its acquisition, Emeco is looking to raise $65 million from a fully-underwritten one-for-10.29 rights issue at $2.07 per share.
Goldman Sachs is acting as lead manager and underwriter to the offer, which is due to close on February 14, while Hartleys is acting as co-manager.
Emeco requested a trading halt yesterday, which is expected to remain in place until the entitlement offer opens on January 31.
The company has also released financial results for the first half of the 2020 financial year, with revenue up 10 per cent to $246 million on the prior corresponding period, while earnings before interest, tax, depreciation and amortization was up 16 per cent to $119 million.
Emeco said the results were driven by improving rates, utilisation and operational efficiencies.