Emeco dips into Australian debt markets

Earthmoving vehicles and machinery from equipment hire firm Emeco, based in Perth.

Emeco is tapping the Australian bond market for funds as it also makes efforts to secure funding in the US to refinance its debt.

As of December, the company’s net debt was $442m and the plan is to refinance its existing notes in a dual tranche offering in both Australia and the United States.

It is understood that the company first approached the United States market and there wants to secure about $US300m.

Now it is understood that the company has tapped UBS here in Australia to secure up to about $350m through its retail broker network, according to sources.

The bonds are expected to pay a yield of about 6 or 7 per cent.

Emeco is said to have turned its attention to this market after the bond yields in the US market climbed as high as 9.25 per cent.

Investment bank JPMorgan is believed to be handling the US-based raising, and how much is tapped from that market is understood to depend on how successful the company is securing funds in Australia.

The news comes after investment bank UBS also embarked on a bond raising for Virgin Australia in this market last year, securing $325m.

The notes were sold at $1 each and are now trading at about 92c.

It comes after Emeco in January announced it had purchased Pit N Portal for $82m in a cash and scrip deal and would tap the market for $65m through Goldman Sachs and Hartleys.

Only about three years ago, Emeco was on the brink of collapse and was subject to a major recapitalisation.

The company has since been tipped as a possible takeover target, although much of its future hinges on the intentions of hedge fund Black Diamond that owns 18.65 per cent of the stock.