A private equity firm will seize control of troubled mining services company Boart Longyear as part of a plan to mining services giant.
The global drilling services company on Thursday announced a complex recapitalisation plan, worth hundreds of millions of dollars, in a move designed to repair its balance sheet.
Shares in Boart jumped 30 per cent in early trade, rising 4.5 cents to 19.5 cents by 9,45am.
The company’s Australian headqaurters are based in Adelaide.
Under the plan, Boart will receive an equity injection of up to $US127 million and has sealed new loan deals worth more than $US200 million.
It has already completed a $US5.6 million share placement to its largest investor, private equity outfit Centerbridge Partners, which will increase its stake in Boart to 19.9 per cent from 12.7 per cent.
Another $US21 million placement is planned for December, taking Centerbridge’s stake to 37 per cent.
Boart also plans a renounceable rights offer of between $US76 million and $US84 million, and a share buyback worth up to $US20 million.
“In summary, we believe this transaction with Centerbridge … will ensure that the Boart Longyear franchise, which will have been operating 125 years next year, remains fundamentally strong and valuable,” chief executive Richard O’Brien said.
Boart, which in August reported its fourth consecutive half-year loss, of $US143 million, has been considering selling all or part of the company as part a review of its business amid a backdrop of tough trading conditions.
As it announced details of the recapitalisation plan, Boart reported a slide in third quarter revenues to $US239 million from $US280 million a year earlier.
Underlying earnings improved to $US12 million, from a loss of $US1 million.
Net debt was at $US550.9 million by the end of the quarter, which was higher than the same time a year ago but an improvement on the $US555.8 million recorded in the previous three months.
Boart said it expected flat utilisation rates and volume levels for the rest of the financial year.
Boart shareholders are due to vote on the complex recapitalisation plan in late December.
