Ausdrill Limited (ASX: ASL) announced on 11th April 2019 that the diversified mining services company entered into a binding agreement with Pentium Hydro Pty Ltd and Vysarn Limited (ASX: VYS) to sell its waterwell drilling assets.
The company is selling its hydrogeological drilling assets which were operated as Connector Drilling for a cash consideration of $16 million.
In the Asset Sale Agreement, the company agreed to sell various waterwell drilling assets and associated inventory that is in current use of the company’s waterwell business.
However, the completion of the agreement is subjective upon the satisfaction of various conditions such as approval of shareholders, ASX and the Purchaser ability to obtain the finance required to fulfil the purchase price under the agreement.
As per the Managing Director, Mark Norwell, the sale of the asset is a part of a portfolio consideration review, undertook by the company to assess the businesses that fit within the new strategic direction of the company.
The company recently received a contract extension from Ghana Manganese company.
In an announcement made by Vysarn Limited, the company mentioned that it intends to obtain debt funding of approx. $8 million along with a public offer to raise the capital of $5 million. The debt and public financing will be used by the company to purchase the assets under the Asset Sale Agreement form Ausdrill and to finance the working capital requirements.
The agreement is also subjective to the shareholder’s approval, and Vysarn intends to issue a notice of meeting to seek the approval from the shareholders of the company for the proposed transaction.
As per the company, the acquisition of the Ausdrill’s assets underpins its aim to become a significant provider of production critical services and solutions to various industries such as construction, resources, and utilities. Vysarn explained that the proposed transaction would enable the company to meet the growing requirements associated with fluid extraction, distribution management, as well as mineral resource definition of these industries. The services and solutions that will be provided to these industries by the company include drilling, top of hole infrastructure, fluid and power distribution infrastructure, process control and ongoing support services.
Assets Under the agreement:
The proposed assets include a large fleet of state-of-the-art conventional air, mud, and dual rotary drill rig suites. Along with these suites the company will acquire:
Five Foremost DR24 Dual Rotary Rigs, three Schramm T130D rigs with deep hole dual rotary capabilities and two Schramm 685 Conventional rigs. Apart from the rigs, the company will acquire ancillary equipment as part of the rig suites including casing rotators, rod loaders, multiple Sullair air compressors, rig carries and CAT backhoes.
Vysarn will also receive downhole equipment including drill rods, drill bits, and stabilisers.
The risk that the company will inherit with the proposed transaction includes new business risk, safety risk, and environmental risk.
VYS stock last traded at A$0.035 (as on 8th July 2016). ASL closed the day’s session on 11 April at A$1.645, up 0.305%.
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