Transport and logistics company McAleese Group has announced a recapitalisation deal with its financiers and a Hong Kong investments group, which includes de-listing from the ASX and undertaking a $26 million capital raising.
Transport and logistics company McAleese Group has announced a recapitalisation deal with its financiers and a Hong Kong investments group, which includes de-listing from the ASX and undertaking a $26 million capital raising.
McAleese, which operates at Atlas Iron’s Abydos and Wodgina iron ore mines in the Pilbara, has entered into a binding heads of agreement with its existing financiers and a consortium led by SC Lowy Primary Investments to restructure the business.
Under the terms of the debt for equity swap, McAleese’s entire senior debt will be extinguished in exchange for $112.3 million, with the SC Lowy consortium to acquire $91.3 million worth of the debt.
McAleese will pay $16 million in cash to SC Lowy, plus a further $5 million after selling off its Cootes Transport business, which forms the majority of its oil and gas division.
A further $5 million will be paid by McAleese up to 12 months after the date at which the senior debt is acquired.
McAleese will also undertake a $26 million entitlement offer of secured convertible notes to its shareholders, with the proceeds to be used to partially repay the new senior debt facility.
Entities associated with McAleese managing director Mark Rowsthorn have agreed to underwrite the entitlement issue.
Post-raising, McAleese shareholders (excluding the entities associated with Mr Rowsthorn) will emerge with just 42 per cent of the company's issued shares.
McAleese will also seek approval for de-listing from the ASX, however as part of the restructure the company will be required to consider pursuing a re-listing up to 2 years later.
“The announcement of the recapitalisation represents an important milestone for McAleese, establishing a stable platform from which to service our customers and invest in the business,” McAleese chairman Don Telford said.
“The announcement is the result of an extensive process, conducted over several months with the forbearance of our bank group.
“While the outcome is a disappointing one for existing providers of both debt and equity, we are pleased that shareholders will have the opportunity to consider, and participate in, the recapitalisation.”
Upon completion of the recapitalisation, SC Lowy and Mr Rowsthorn will have the right to appoint a director for each 15 per cent stake they hold in the business.
The deal requires shareholder approval for it to be successful.
McAleese also told the market its bulk haulage division, which services Atlas Iron, received no profit share over the latter part of the first half of FY16.
“However improved AUD iron ore prices in recent months have resulted in greater profit share from Atlas’s operations and stronger earnings from the bulk haulage division,” the company said.
It also said it didn't expect conditions to improve during June.
McAleese shares, which have been suspended from trade since March, will be reinstated today.
