Ann: Trading Halt-EHL.AX, page-12

From west Australian
Emeco Holdings is preparing to announce tomorrow a proposed merger with two east coast contracting companies that is hoped will secure a long-term future for the mining equipment supplier.

The complex deal with Queensland’s Orionstone and Andy’s Earthmoving from Victoria is understood to include debt-for-equity swaps with lenders which would ease Emeco’s debt burden.

The combined entity - which would remain as a listed company - would seek to raise $20 million from investors once shareholders and bondholders have approved the deal.

Emeco’s biggest shareholders - fund managers First Samuel and Black Crane - are understood to have agreed to underwrite $10 million of the raising.

Their support comes despite shareholders potentially being diluted by about 60 to 70 per cent by the transaction.

The agreement of banks and bondholders would see the expiry of Emeco’s bonds pushed back from 2019 to 2022.

About $US130 million ($170 million) debt would be swapped for equity. The merged entity would still have about $450 million to $500 million in debt.

The transaction would also benefit the company by the addition of Orionstone and Andy’s Earthmoving newer fleet, decreasing the average age of Emeco’s equipment.

Emeco managing director Ian Testrow would retain his position, with Orisonstone’s Ashley Fraser and Andy Hoare of Andy’s Earthmoving joining the management team.