Bradken (BKN) shares leapt more than 14% yesterday after the company said it knew of no reason for the recent dip in the price of its shares and reiterated that it remains interested in talking to its would-be acquirers.
The company also confirmed it remained on track to meet earlier earnings guidance – a reassurance that there were no more surprises for shareholders on the way.
Bradken shares have eased from around $2.35 in mid-June to $1.15 earlier this week.
There had been some suggestions that interest had faded in a deal with would-be bidders, Magotteaux in co-operation with CHAMP and Sigdo Koppers (the parent of Magotteaux).
That approach was revealed to the market in late June.
Bradken said it was reviewing a merger proposal from the Magotteaux Group, which is a supplier of grinding equipment as well as construction and mining services. It is a subsidiary of Chilean group, Sigdo Koppers, which has teamed with CHAMP Private Equity.
Bradken gave Magotteaux a 60-day exclusivity period to review the strategic and financial merits of a merger.
BKN 1Y – Bradken "continues to explore a potential transaction"
Bradken made it clear yesterday that it was still interested in any deal.
“Bradken continues to explore a potential transaction with Magotteaux in co-operation with CHAMP and Sigdo Koppers and will keep the market informed of developments,” the company said.
And it also said its financial results remained on track.
“Bradken confirms that the FY15 results will be in line with its guidance on 26 June 2015; FY15 EBITDA will be in the range of $136-$138 million and reported Net Debt will be approximately $410 million as at 30 June 2015 (excluding Redeemable Convertible Preference Securities),” the company said yesterday.
"While Bradken’s end markets remain challenging, Bradken continues to take proactive steps including restructuring the cost-base of its operations to ensure quality of earnings is maintained," the company added.
In the June 26 announcement and update, Bradken said it ”expects to incur a non-cash impairment charge as at 30 June 2015, primarily relating to goodwill and other intangible assets, in the range $135 to $145 million," most of this is in the newly formed Mining and Transport division.
"The impairment has resulted from continued lower trading conditions, such as the reduction in cast parts for mobile plant sold to OEMs and rail wagon volume. Bradken continues to believe in the inherent value of these businesses, but the current charge is required due to the challenges in forecasting the timing of a return of the capital mining products cycle.”
The news of the continuing interest in a possible deal and the unchanged guidance (weak as it is) saw the shares rise 14.3% to $1.225 at the close yesterday.
