Directly from today's Australian..... Emeco will launch a $20...

Directly from today's Australian.....

Emeco will launch a $20 million equity raising by the end of tomorrow, with the shares offered at 8.7c each as part of a transformational $700m deal that will see the earthmoving equipment provider merge with rival firms Orionstone and Andy’s Earthmovers.
Emeco, worth $1.2 billion about a decade ago at the peak of the mining boom, has seen its market value fall to as little as $40m on the back of weaker demand from the resources sector.
However, the company has been in talks about a merger plan with Orionstone for more than a year, through its adviser Houlihan Lokey and also Macquarie Capital.
This week it announced a three-way tie-up with not only the Moelis-advised party but also Andy’s Earthmovers, a Bendigo-based company of which Andy Hoare is executive director.
In the latest plan, the group will tap the market for $20m in cash, half of which will be underwritten by Emeco’s two largest shareholders — First Samuel and Black Crane, which control 19.8 per cent and 14.95 per cent of the company respectively.
The 8.7c issue price will be at a premium to its last traded price of 5.3c a share.
Its shares remain in a trading halt.
The three-way merger and restructure is being described as transformational for the mining services sector in what is the first major roll-up play in an industry where companies are searching for ways to remain afloat amid challenging conditions.
Previous mega-merger scenarios have been explored for the industry.
Companies said to be under scrutiny as part of such a move were Bradken, Magotteaux, Esco, ME Elecmetal, CQMS Razer and Arrium’s Moly-Cop, along with Austin Engineering.
However, no such deal was ever able to be achieved.
Ascribe Capital is the largest bondholder in Emeco, behind Goldman Sachs Special Situations and Brookfield, and the bonds are said to be trading at about 60c in the dollar.
At June, its net debt sat at $377.2m and the latest deal will see loans on the new entity refinanced for five years.
While Macquarie is said to have been the equity adviser for Emeco for some time, most of the deal was spearheaded by Houlihan Lokey, according to sources.
The advisory firm is also working on a restructure of Boart Longyear, which will likely involve a secondary recapitalisation by hedge fund Centrebridge Capital and has previously recapitalised Atlas Iron.
Orionstone describes itself as the largest privately owned heavy earthmoving equipment supplier in Australia, with a fleet of over 300 machines and is backed by Advent Private Capital.
Andy’s Earthmovers is effectively controlled by its financier ANZ.
The latest deal may enable Emeco to turn around from
loss-making territory after it plunged $90.5m into the red for the 2016 financial year.
However, for the 12 months to June, Emeco produced a 25 per cent lift in its earnings before interest, tax, depreciation and amortisation to $54.2m despite the limited use of its machinery amid continued market weakness, and it also drove its debt down by $48.5m over the year.
Post the restructure, the new entity will have a value of about $700m, the value of the debt and the implied value of the shares.