US private equity Centerbridge Partners has agreed to the refinancing of Australian mining company Boart Longyear to reduce the firm’s massive debt burden, which is expected to stabilise its capital structure, according to a statement.
Centerbridge will provide up to $225 million through two term loans, as well as up to $127 million in equity, including an $84 million fully-underwritten renounceable rights offer in which shareholders can participate.
The deal will increase Boart’s total liquidity to around $240 million, with its net debt reduced to about $120 million.
Boart, an ASX-listed company that provides drilling services, equipment and performance tools for mining and drilling companies globally, said in February it held about $525 million in debt and was looking to restructure to avoid going into liquidation.
“The recapitalisation is an important step forward for Boart Longyear and its shareholders. We are preserving our existing shareholders‘ opportunity to participate in the future prospects of the company and the improving future margin potential to be realised when our markets do improve and we reap the benefit of the significant cost and efficiency actions the company has taken over the past 18 months,” Boart chief executive Richard O’Brien, said in a statement.
“Additionally, we anticipate the recapitalisation will provide the company with significant liquidity to better weather the challenges of the current depressed markets for our drilling services and products and the financial strength to allow more time for those markets to recover. The financial flexibility and resources provided by the recapitalisation will allow us to further build on our existing strengths in customer service and tactical investments in incremental, customer-focused product development.”
Centerbridge, a New York-based private equity firm, has been eyeing troubled assets in Australia, being part of the acquisition that revived iconic surfwear brand Billabong in September last year.
Billabong accepted more than $500 from Centerbridge Partners and Oaktree Capital Management – who had profited from being a senior lender in the CVC Capital Partners investment in Australia's troubled Nine Entertainment. The Billabong deal came just a month after the company had revealed a refinancing plan worth $315 million from Blackstone Credit Group’s GSO Capital Partners and Altamont Capital.