Australia: Bradken’s board blocks CHAMP’s bid to increase stake, appoint new chairman

Australian mining equipment supplier Bradken Ltd.’s board has refused to allow existing investor CHAMP Private Equity‘s bid to increase its stake and appoint a new chairman.

Bradken told the Australian Stock Exchange that CHAMP had made an unsolicited recapitalization bid, which involved two share placements worth $150 million. If that were allowed, CHAMP would have ended up owning 49.9 per cent of Bradken. In other words, it would have given CHAMP a potential blocking stake.

Bradken is among Australia’s mining companies that have been hit by plunging commodity prices as growth in China’s materials-intensive economy slows.

But it said in an update Thursday that trading conditions had stabilized in the March quarter, and that it had 16 per cent higher orders than in the same period last year.

The proposal from CHAMP had asked for the appointment of a new chairman, and a $1.5 million break-up free if another player made a proposal to buy Bradken. Its share placements were at 75 cents and $1 per share, which the board felt did not reflect fair value.

Last year, Bradken had rejected a conditional A$428 million offer from Koch Industries and Pacific Equity Partners.

CHAMP, which has $2 billion in funds under management, used to own Bradken until 2004, when it sold its stake in an initial public offering. Since 2014, it has shown renewed interest in Bradken and invested A$70 million ($54 million) in June last year, along with Chile’s Sigdo Koppers SA. CHAMP had then explored a merger of Sigdo and Bradken, which did not materialize.

Australia’s miners, crippled by more than $1 trillion in debt, are becoming attractive for specialist buyout funds which look for markets where prices are down, mines are losing money and competition is weak. Funds might be willing to invest as much as $3 billion, according to corporate finance and restructuring firm FTI Consulting.

In February, DEALSTREETASIA had reported that steel and iron ore group Arrium, with nearly $2 billion of debt, had secured $927 million in funding from GSO Capital Partners, the global credit and alternative investment arm of Blackstone Group. That funding will help the company retire debt and restructure its business.

Also read:

India inviting bids for 10% stake sale in state mining firm NMDC

Newmont’s stake in Indonesia’s mining subsidiary to be bought out by Medco founder

Australia’s Asciano dumps $6.4 bln Brookfield bid it had endorsed

 

 

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.