Ausdrill Limited Not To Proceed With The Offering Of Guaranteed Senior Notes

  • May 17, 2019 AEST
  • Team Kalkine
Ausdrill Limited Not To Proceed With The Offering Of Guaranteed Senior Notes

Diversified mining services company, Ausdrill Limited (ASX: ASL) has decided not to go ahead with the proposed offering of US$500 million Guaranteed Senior Unsecured Notes due to the weakening in the market conditions.

Earlier when the company had announced regarding the proposed offering of Guaranteed Senior Notes, the market for US Notes was going strong. At that time, the company was considering refinancing its existing debt, including the Barminco Senior Secured Notes that are not due until May 2022, through issuing new competitively priced, longer term, US Notes. Even Moody’s Investors Service, a leading credit rating agency, had assigned a ‘Ba2’ issue rating to the proposed US$500 million Guaranteed Senior Unsecured Notes.

However, now due to the escalation in the US/China trade war and the sharp decline in the US equity markets earlier, the attractiveness of refinancing is gone. Therefore, the company has abandoned its plan for refinancing through the offering of US$500 million Guaranteed Senior Unsecured Notes.

The company will now be disciplined around capital management and will not undertake transactions, including refinances, unless the economics are beneficial to the company.

The company had advised that its existing debt facilities are proving both the capacity and flexibility to support the business.

Ausdrill Limited’s principal activity is providing underground and surface contract mining and exploration, development and production-related services to mining clients across Australia, Africa and India. These services consist of hard-rock specialized services, high speed decline development and production services, load and haul, crusher feed, drilling and blasting, in-pit grade control and mineral analysis. The company supplement its in-field services with in-house expertise of designing and manufacturing drilling rigs and ancillary equipment. The company also provide supply and logistics solutions and mineral analysis and exploration services to its other mining services businesses and external customers, including fleet rental and parts supply, which represent a small percentage of its revenue. Besides this, the company is also involved in providing underground diamond drilling services for mineral grade control and orebody definition in Australia and Egypt.

In the first half of FY19, the company reported a proforma sales revenue of $971.7 million, up 16% on the previous corresponding period (pcp). Further, the company also reported proforma profit after tax of $55.2 million, up 33% on pcp. The company’s number of employees has now increased to 7,502, an increase of 42.1% compared to June 2018, mainly due to the addition of 1,874 employees from the Barminco acquisition.

No. of Employees over Different Period (Source: Company Reports)

In the past six months, the share price of the company increased by 3.86% as on 15 May 2019. At the time of writing, i.e., on 17 May 2019 AEST 2:48 PM, the stock of the company was trading at a price of A$1.500, up 1.351% during the day’s trade with the market capitalisation of ~A$1.01 Bn. The stock is trading at a PE Multiple of 3.070x.


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