CHAMP Private Equity wants to pump $150 million into Bradken, the mining services whose business has shrunk in the resources downturn, in return for a bigger stake.
A short time ago, the shares were up 7.59% to $0.78 but still well behind the year high of $2.55.
The recapitalisation proposal from funds managed by CHAMP would involve new equity of $150 million in two separate share placements, one at $0.75 a share and another at $1.
CHAMP currently has 3.1% of Bradken. The new deal would give it between 49% and 49.9%.
The board of Bradken, however, says the proposal isn’t in the best interests of shareholders because it means giving CHAMP a potential blocking stake at an overall price which doesn’t reflect fair value.
Bradken says trading conditions stabilised in the first quarter of the calendar year and the company is performing in line with expectations as at the end of March 2016).
Underlying EBITDA (earnings before interest, tax, depreciation and amortisation) for the six months to June is still expected to exceed the $51.9 million reported for the six months to December.
In February, Paul Zuckerman, a former senior executive at Fletcher Building, was appointed CEO of Bradken, and promised to push ahead with restructuring the group.
Bradken posted a loss of $168.1 million for the latest half year.
A little more than a year ago, Pacific Equity Partners and Bain Capital Asia made a $5.10 share bid for the 90-year-old Bradken, valuing it at $872 million. Today the company has a market capitalisation of $133 million.
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