CHAMP PE, Sigdo Koppers pull plug on Bradken deal
CHAMP Private Equity and Chilean conglomerate Sigdo Koppers have abandoned merger discussions with struggling Australian mining industry supplier Bradken.
The two groups agreed to invest A$70 million ($54 million) in Bradken in June and consider a merger between the Australian company and Sigdo Koppers subsidiary Magotteaux Group. Bradken said in a regulatory filing that merger talks have ended after it rejected a request for the exclusivity period to be extended.
The commercial terms of the investment remain unchanged. CHAMP agreed to subscribe to 560,000 redeemable convertible preference shares for an aggregate consideration of A$56 million, while Sigdo Koppers committed A$14 million for 140,000 shares. Bradken said this capital injection will provide debt relief and allow it to focus on restructuring.
The company is one of several Australian mining services players hit by the commodities downturn, has been the subject of several private equity buyout offers in the last 12 months. Pacific Equity Partners (PEP) and Bain Capital had one offer rebuffed and a follow-up was abandoned due to difficulties obtaining funding. PEP returned in April with Koch Industries only to see a new bid rejected.
Bradken produces milling and crushing equipment used in mineral processing as well as mining equipment, cast metal services, and products for the transport and general industrial sectors. The company relies on the resources sector for around 90% of its revenues, with one quarter tied to iron ore mining and processing activities. Australia and New Zealand account for nearly half of revenue.
The company reported a net loss of A$241.3 million for the 12 months ended June 2015; revenue fell 15% to A$965.9 million; and EBITDA was down 23% at A$109.7 million. However, the company claims underlying net profit is A$33.9 million, once restructuring and impairment costs are excluded.
Bradken's stock is currently trading at approximately A$1.17. When PEP and Bain tabled their first buyout offer in August 2014, they were willing to pay A$6.00 per share.
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