PERTH (miningweekly.com) – Mining services provider MACA has struck a A$175-million deal with fellow lited Downer EDI to acquire its Mining West business unit.

The acquisition would cover all assets, contracts, employees and liabilities comprising the Mining West business, which currently include four large contracts at the Karara, Eliwana, Cape Preston and Gruyere mines, with contracted work in hand at the end of June being worth some A$1.1-billion.

The A$175-million acquisition would consist of a A$109-million upfront payment and a A$66-million deferred payment, which will consist of 12 monthly payments of A$5.5-million each.

“The acquisition of the Mining West business provides MACA with a very meaningful addition of a large-scale mining fleet that is currently engaged across four long-life projects, all with quality customers that are well known to me and other key members of MACA’s management team,” said CEO and MD Mike Sutton.

“With the inclusion of Mining West, MACA now has total contracted work in hand of over A$3.4-billion, that provides a robust revenue base well past 2025. MACA remains very active with its tendering activities and is well placed to pursue a significant number of opportunities across both current and new projects,” Sutton added.

Downer EDI CEO Grant Fenn on Tuesday said that the sale of the opencut Mining West marked another important step in the implementation of Downers’ Urban Services strategy.

“An important part of our Urban Services strategy is to exit our capital-intensive Mining business. The sale of opencut Mining West follows the sale of Downer Blasting Services, the Snowden consulting business and our share in the RLT Mining and Earthworks joint venture. The proceeds received from these four transactions is in line with the carrying value of these businesses.”

Fenn said that Downer remained in active discussions with a number of interested parties in relation to other parts of its Mining portfolio, including opencut Mining East, Underground and the Otraco tyre management business.

The sale of the Mining West division is expected to occur early in the 2021 calendar year, and is subject to customary conditions.

Meanwhile, MACA on Tuesday said that the acquisition of the Mining West division would be funded by a A$130-million debt facility and a A$75-million capital raising.

The capital raising will consist of a A$41-million fully underwritten institutional placement, and a A$34.2-million accelerated pro rata non-renounceable entitlement offer at a rate of one-for-eight, with a A$19-million institutional component and a A$15-million retail component.

Some 33.5-million new shares will be placed under the entitlement offer, priced at A$1.02 a share.

The offer price represents an 8.1% discount to the five-day volume weighted average price of MACA shares.

A further 40.2-million shares will be placed with institutional, profession and sophisticated investors under the company’s existing placement capacity.