Australia's Bradken rebuffs another CHAMP PE approach

Bradken said in a regulatory filing that it was approached by CHAMP in March with a proposal to subscribe to an unconditional placement at A$0.75 per share and a placement conditional on shareholder approval of A$1.00 per share. As of early afternoon trading on April 21, the company's stock had risen 14.5% to reach A$0.83 in response to the announcement of CHAMP's move.

The private equity firm held a 3.1% interest in Bradken when the proposal was submitted. Under the deal, its stake in the company would rise to as much as 49.9%. In addition to requiring Bradken to commit to exclusive negotiations, the GP wanted to install a new independent chairman and the right to appoint board representatives proportionate to its shareholding.

Bradken rejected the offer on April 19. It said the price did not reflect fair value given the size of the shareholding and that the unconditional placement would provide CHAMP with a potential blocking stake, reducing the chances of competing proposals.

CHAMP and Sigdo Koppers agreed to invest A$70 million ($54 million) in Bradken in June with the possibility of a merger between the Australian company and Sigdo Koppers subsidiary Magotteaux Group. CHAMP and Sigdo Koppers also agreed to invest A$56 million and A$14 million, respectively. The merger talks ended when a request to extend the exclusivity period was rejected.

Bradken, one of several Australian mining services players hit by the commodities downturn, has been targeted by several PE players. 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 88% of its revenues, with one fifth tied to iron ore mining and processing activities. Australia and New Zealand account for just under 40% of revenue.

Revenue for 2015 came to A$965.9 million, down from A$1.13 billion the previous year. EBITDA dropped to A$136.1 million from A$173.3 million, while net profit fell to A$33.9 million from A$55.1 million. In the six months ended December 2015, sales reached A$404.5 million, down 18% year-on-year, while underlying net profit was down 49% at A$7.1 million. The company had A$393.2 million in net debt.

CHAMP is in the process of raising its fourth buyout fund, with a first close coming earlier this year.

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• Topics
• Australasia
• Industrials
• Buyouts
• Commodities
• Australia
• CHAMP Private Equity