Barminco to be acquired by Ausdrill

Underground hard-rock mining contractor Barminco Holdings Limited has announced it has entered into an agreement to be acquired by ASX-listed diversified mining services company Ausdrill Limited.

Ausdrill will acquire all of the equity and equity-like instruments in Barminco, and assume Barminco’s debt, in exchange for 150.7 million fully paid ordinary ex-dividend Ausdrill shares and $25.4 million in cash. Of note, it is intended that Barminco’s US$350 million Senior Secured Notes, issued in April 2017 and due for repayment on 15 May 2022, will remain on issue.

The transaction is equivalent to an equity acquisition price of $271.5 million and an enterprise value of $697.0 million.

Barminco shareholders will own 22.1% of the fully paid ordinary shares in Ausdrill post-completion of an associated Ausdrill equity raising and closing of the transaction. In addition, Barminco Non-Executive Chairman Keith Gordon will join the Ausdrill board following completion.

“Barminco and Ausdrill are a great fit, with the businesses providing complementary services and having worked together for a decade through our AUMS joint venture,” said Barminco Chief Executive Officer Paul Muller. “By bringing these two businesses together and creating Australia’s second-largest mining services company, we will be able to provide a broader range of services for our customers and generate additional opportunities for our employees.

“Barminco had a strong 2018 financial year and our focus is to continue safely delivering results for our customers.”

The company currently operates at 11 projects in Australia and two overseas (Egypt and India), with AUMS operating at a further five projects in Africa. Barminco employs 1800 people with an additional 1000 people employed with AUMS.

The transaction is subject to a number of conditions precedent, including Ausdrill shareholder approval, no material adverse change to Barminco or Ausdrill, a favourable independent expert’s report, continuation of material contracts and required change of control consents.