(MENAFN- ProactiveInvestors - Australia) SVC Group (ASX: SVC) has inked a share purchase agreement to acquire SubZero Holdings Pty Limited, which operates an established and profitable New South Wales-based mining services business.
SubZero's clients are almost exclusively involved in the Hunter Valley thermal coal mining industry and include majors such as BHP Billiton (ASX: BHP), Rio Tinto (ASX: RIO) and Xstrata (LON: XTA).
The company's services include mining project support, equipment hire, offsite engineering and fabrication, onsite machining, field services and heavy machinery repairs.
In the 2012 financial year SubZero reported gross revenue of A$83.6 million, a 27% increase on the previous year, and EBITDA of $12.85 million, a 165% increase over the 2011 financial year.
There is expected to be further substantial growth in both revenue and profitability in the 2013 and 2014 financial years.
Deal terms
To satisfy the deal SVC will issue 120 million shares to the vendors at $0.25 each on settlement.
Up to an additional 10 million shares will be issued, also at $0.25 each, to repay debt owed by SubZero.
A further issue of between 15 million and 30 million shares may be made to the vendors if agreed EBIT targets are met in the year ending 30 June 2014.
Prospectus
Under the agreement, SVC will also issue a prospectus to raise a minimum of $4.5 million and a maximum of $6.5 million through the issue of new shares at $0.25 each.
The funds raised will be used to fund debt reduction; the fitout of SubZero's newly leased purpose built mining equipment and machinery maintenance and refurbishment facility at Muswellbrook; and working capital.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.