Company news: Emeco
Emeco announce a capital raising.
As previously advised in Investment Matters, Emeco is merging with Orionstone and Andy's Earthmoving. Under the merger, a debt restructure will also occur, including a debt for equity swap. A stronger company will be formed, with less debt, more profit and better assets. Settlement of the transaction will occur on the 31-Mar-17.
As a part of the overall merger and recapitalisation plan a $20m capital raising is occurring and was announced this week. This raising was essential to provide a mechanism to close the overall merger and debt restructure deal, and occurred with First Samuel's full oversight. At the average price, First Samuel clients (as distinct to non-clients) will pay to participate: they will be paying 3.5x free cashflow (free cashflow: being increased cash left in the bank at the end of each year) at the end of its first full year.
Whilst it may take the market a while for all the changes to be digested, your investment team has spent a long time considering the business, its plans, prospects, management and market position, and believes we will be well rewarded in due course for this cheap investment, which is occurring as we come off the bottom of the heavy equipment cycle.