Manufacturer of Mining Castings Bradken to Buy AmeriCast

31 Jul 08

Bradken Ltd, a supplier of equipment and services to the mining industry, has agreed to acquire the remaining interest in United States company AmeriCast Technologies for $114 million to increase exposure to the resources sector.

The acquisition of the 83 per cent stake that Bradken doesn't already own from funds managed by Castle Harlan Inc and AmeriCast management will be funded primarily by a fully underwritten $110 million placement to institutional clients.

Seven years of commodity price gains, underpinned by demand from China and other developing nations, is driving mining companies to expand rapidly and develop operations and increasing demand for services and equipment.

Bradken said the acquisition would provide an American base to expand some of its mining consumable products, add scale in China and leverage the group into the large and growing resources markets.

"The acquisition of AmeriCast will significantly expand Bradken's capabilities in large steel castings and provide an American base from which to expand some of Bradken's mining consumable products," managing director Brian Hodges said in a statement.

Bradken shares are in a trading halt and last traded at $8.84.

Kansas-based AmeriCast has foundries and machine shops in North America, a trading office in China and manufacturers engineered steel castings larger than 4.5 tonnes for the energy and resources sectors.

The company acquired its initial stake in AmeriCast in November 2006 in a buyout with the company's management and Castle Harlan, with Hodges joining the board.

AmeriCast was expected to deliver pro-forma normalised revenue of $354 million and earnings before interest, tax, depreciation and amortisation of $50 million for the 2008 financial year, Bradken said.

A $2 million placement to AmeriCast management and Bradken directors and a share purchase plan will be offered to help fund the acquisition, which is expected to be completed within two weeks.

"Post closing, we intend to support Bradken in its effort to grow AmeriCast and its business in North America," Castle Harlan senior associate Anand Philip said in a statement.

Bradken said it would be "well placed to capitalise on future growth opportunities" following the acquisition and equity raising.

Merrill Lynch acted as sole financial adviser for the acquisition and Goldman Sachs JBWere acted as underwriter, sole lead manager and bookrunner of the placement.

The acquisition is the latest in a string of purchases since June 2007 by Bradken, which includes the purchase of TMS Engineering in Tasmania, Roll Neck Rings in the United Kingdom and 75 per cent of Cast Metal Services in Queensland.

Visit Bradken's ManufactureLink supplier showroom to learn more about their capabilities and to contact them.

Source: Australian Associated Press

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