West Perth-based Vysarn has expanded its water services business by acquiring local company Yield Test Pumping.
West Perth-based Vysarn has expanded its water services business by acquiring local company Yield Test Pumping.
The company, led by managing director James Clement, will acquire 100 per cent of Yield’s shares for a total price of $2.9 million.
This comprises five million Vysarn shares, worth about $400,000 at today’s closing price of 7.9 cents, and $2.5 million in cash.
Vysarn said Yield was expected to contribute underlying profit, or EBITDA, of between $700,000 and $800,000 in the first full 12 months of ownership.
The vendors may receive further payments, based on Yield’s EBITDA over the next three years.
Vysarn said the acquisition of Yield would provide growth opportunities for its Pentium Hydro Group through the expansion of Yield’s test pumping services and fleet.
It marks Vysarn’s first entry away from being a hydrogeological drilling specialist to a vertically integrated water service provider.
Yield commenced operations in 2015.
Its services include calibration testing, step testing, constant rate testing, artesian well testing, recovery testing and downhole camera services.
The data collected by these services is used by hydrologists to make decisions on how an aquifer reacts under the pumping conditions, borefield infrastructure design and installation.
It provides services to Fortescue Metals Group having executed a Master Service Agreement in June for a term of two years.
Yield managing director and major shareholder Dwayne Moppett has agreed to sign a three-year executive employment agreement with Vysarn.
The purchase includes the business operations, contracts, tangible assets, working capital, intellectual property, transferring employees, and inventory to support ongoing operations.
Vysarn is planning to fund the acquisition through its cash reserves and debt.
Vysarn’s shares closed 5.3 per cent higher today at 7.9 cents.
