The original purchase by TPI belowRecycling giant Transpacific...

The original purchase by TPI below

Recycling giant Transpacific Industries
Group has agreed to take
a 15 per cent stake in scrap metal
minnow CMA Corporation in a
deal that stands to deliver CMA
$25 million.
Under the agreement, CMA
will immediately issue Transpacific
22.8 million shares at 48.5¢
apiece.
Transpacific, which is valued
at $3.1 billion, has the right to
acquire a further 27 million
shares pending CMA shareholder
approval at the company’s
annual meeting on November
30. CMA shares climbed 2.5¢ to
56¢ while Transpacific rose 23¢
to $11.18.
The strategic investment
marks a coup for the fledgling
scrap metals group which has at
times struggled since listing at
40¢ per share in July 2005.
Formed via a merger of Perthbased
Moltoni Adams and Sydney-
based T&T Group, CMA
disappointed shareholders in its
maiden year after it failed to meet
prospectus forecasts and
scrapped its annual dividend.
CMA had forecast a $9.9 million
net profit for fiscal 2005-06
and pledged to pay out 55 per
cent of its net profit in dividends.
But delays in new contracts and
the cost of winding down existing
jobs slashed its annual profit
to $1.7 million and pushed its
share price to a low of 23.5¢.
CMA managing director Peter
Hatfull said yesterday the company
had problems in its first
year but it was on track to deliver
strong growth because of the
ongoing demand for metals and
acquisitions this year.
Over the past financial year
the group has bought and integrated
four businesses and delivered
a 284 per cent increase in
annual net profit to $6.5 million
on the back of a doubling of revenue
to $237.3 million.
He would not comment on
whether the strategic investment
by Transpacific would lead to a
takeover bid.
“There are numerous and significant
benefits and operation
synergies that this relationship
will bring to CMA,” Mr Hatfull
said.