The company’s share price slumped almost 30 per cent on Thursday after it announced to the Australian Securities Exchange that it planned to convert $1.03 billion (US$795 million) of its debts into equity, which will result in its lenders owning more than 98 per cent of the company’s shares when the recapitalisation is complete.
The bulk of Boart Longyear’s operations are based out of Salt Lake City, Utah. It is listed on the Australian Securities Exchange with its corporate office and tax domicile located in the Adelaide Airport Business Park.
It says it is seeking approval to move its corporate and tax domicile to North America to streamline its corporate structure, better align with global operations, and secure improved access to capital markets and a broader investor pool.
The company will maintain its listing on the ASX and investors will continue to have the ability to buy and sell shares.
Boart Longyear shares opened at $0.53 ahead of yesterday’s announcement, before finishing the day down 28 per cent to $0.38.
Board Chair Kevin McArthur said the company had “thoroughly investigated a number of strategic alternatives” over the past year.
“Simply put, this recapitalisation is clearly our best path to recovery for both lenders and equity holders,” he said in a statement to the ASX.
“The independent Board of Directors established to oversee the process is unanimous in approval of this recapitalisation as serving the best interests of all of our stakeholders.”
Boart Longyear was forced to stand down staff in many parts of the business and slash executive pay packets during the COVID-19 crisis last year.
The world’s largest integrated mineral exploration products and services company has reported losses of $127 million and $73 million for the past two calendar years.
Boart Longyear CEO Jeff Olsen said the company’s underlying business was still sound and the process would not affect day-to-day operations.
“Our operations are competitive, demand for our products and services is increasing, and the operating outlook is brighter than it has been in many years,” he said.
“But our debt level, and its servicing costs, has remained unsustainably high.
“We look forward to progressing to the implementation phase of this well-considered plan, both in Australia and North America.
“Following the transaction, the Company will emerge with an improved balance sheet and an enhanced ability to execute on its growth objectives, as the minerals industry enters an improved commodity cycle.”
Established in 1890, Boart Longyear is in its 130th year as one of the world’s leading providers of drilling services, orebody-data-collection technology, and innovative, safe and productivity-driven drilling equipment.
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