Rescue finance for Boart Longyear

By Chris Sleight24 October 2014

US-based private equity company Centerbridge Partners has announced up to US$ 352 million in loans and new equity for Boart Longyear. The recapitalisation plan is expected to increase liquidity at the drilling equipment manufacturer and drilling services company to US$ 240 million and cut US$ 120 million from its net debt.

The finance package includes two ‘covenant-lite’ loans of US$ 120 million and US$ 105 million which will be used to pay off what the company describes as “covenant-laden bank debt” and fund the redemption of Senior Secured Notes – debt secured against company assets. The loans have an interest rate of 12% per year, falling to 11% if Boart Longyear hits a profitability target

Centerbridge will also inject between US$ 119 million and US$ 127 million into Boart Longyear’s equity base. This will go along with a rights offer that will give other shareholders the opportunity to increase their stake in the company.

Boart Longyear president & CEO Richard O’Brien said, “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 efficient actions the company has taken over the past 18 months.”

The recapitalisation plan has been approved by the Board and its independent directors. It will now be put to a shareholder meeting, which is expected to be held in late December.

Boart Longyear has been hit hard by the global downturn in mining over the last two years or so. At AU$ 422 million (US$ 373 million) its revenues in the first half of this year were less than half the total of AU$ 1.1 billion (US$ 970 million) that they were just two years previously in the first half of 2012.

MAGAZINE
NEWSLETTER
Delivered directly to your inbox, World Construction Week Newsletter features the pick of the breaking news stories, product launches, show reports and more from KHL's world-class editorial team.
Longer Reads
How can employers overcome skills shortages and fill vacancies?
As the pandemic further exacerbates problems finding good new employees, how can employers fill vacancies? 
How is digitisation changing the falsework and framework process?
Digitisation is taking hold in several areas of the falsework and formwork process, enabling the sector to increase efficiency, reduce costs and plan even more ambitious projects
Is construction taking slave labour seriously?
The International Labour Organisation estimates that 4.5 million people are currently working in construction against their will
CONNECT WITH THE TEAM
Andy Brown Editor, International Construction Tel: +44 (0) 1892 786 224 E-mail: andy.brown@khl.com
Simon Kelly Sales Manager Tel: +44 (0) 1892 786 223 E-mail: simon.kelly@khl.com
CONNECT WITH SOCIAL MEDIA