Tuesday 24 May 2016 by Company updates

Ausdrill to sell drilling business for $66m and pay down debt

THIS CONTENT IS SUITABLE FOR WHOLESALE INVESTORS ONLY

Ausdrill will use the proceeds of the sale of its drilling business to pay down debt

Ausdrill has signed a sale and purchase agreement to sell its drilling tools business (DTA) for $66m to Finnish drilling manufacturer Robit plc. A link to the announcement is available hereExternal link - opens in a new window. Ausdrill retains a 2.5 year supply agreement with DTA for the supply of drill bits going forward. The transaction includes DTA’s drill bit manufacturing and distribution business, which generates annual revenues of $35m.

The company plans to use the proceeds of the sale to pay down debt. Ausdrill reported net debt of $319.1m as at 31 December 2015 and total debt repayments over the 18 months to 31 December 2015 have totalled $141.9m.

Trading in Ausdrill is relatively illiquid, with the best estimate of a current indicative offer to be around USD90 (~10.5% - 11% yield to maturity).

With its relatively large exposure to the well performing gold sector, Ausdrill is a potential option for investors seeking a higher yielding, higher risk exposure to gold. The company’s market capitalisation has more than doubled since the beginning of the year to be currently at $164m.

Note: Pricing is highly indicative and the bond is thinly traded.

Please contact your FIIG representative for further details on the Ausdrill US dollar bond. Available to wholesale investors only with a minimum face value of USD200,000.