Bradken to explore merger with subsidiary
Beleaguered mining services group Bradken will explore a merger with a subsidiary of Chilean industrial group Sigdo Koppers, after CHAMP Private Equity teamed up with the Chilean firm to inject $70 million into Bradken.
As revealed by Street Talk on Thursday, Bradken has also done a deal with its lenders to lift the company’s gearing covenant to 3.5 times earnings until December 31, which will give the company valuable breathing space.
Under the deal with CHAMP and Sigdo Koppers, the pair will investment approximately $70 million in Bradken via redeemable convertible preference securities, an option that the Bradken board said would give the company maximum flexibility in the uncertain environment for mining services.
But the investment looks likely to be a precursor to a bigger deal, with Bradken also revealing it will spend the next 60 days working with a subsidiary of Sigdo Koppers called Magotteaux to explore a potential merger.
“Should a merger be consumated, Bradken would be expected to remain listed and headquartered in Australia,” the company said in a statement.
Bradken shares were suspended on Thursday morning at $1.72.
The company rejected a $2.50 a share takeover offer from Pacific Equity Partners and United States-based Koch Industries in April.
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