Boart Longyear Enters into a Recapitalization Transaction with Centerbridge Partners, Successfully Completing Strategic Review

SALT LAKE CITY--()--Boart Longyear Limited (ASX: BLY), a leading global supplier of drilling services, drilling equipment and performance tooling for mining and drilling companies, has entered into an agreement with Centerbridge Partners, L.P. to implement a comprehensive recapitalization of the Company. The recapitalization, which has been completed in part, represents the conclusion of the strategic review process initiated by the Company in February 2014.

Under the terms of the recapitalization, effective today, Centerbridge has replaced the Company’s former bank revolving credit facility with more flexible, “covenant-lite” financing and also has subscribed to a $5.6 million equity placement, which raises its shareholding in the Company to 19.9% of voting shares. Subject to shareholder approval at a meeting expected to occur in December, Centerbridge will provide additional equity capital through a further share placement, the equitization at par of its holdings of the Company’s unsecured bonds and a fully underwritten rights offering, which will be open to shareholders. The recapitalization is designed to stabilize the Company’s capital structure and provide sufficient liquidity to sustain the Company’s operations until the markets for the Company’s mineral drilling services and products recover.

Richard O’Brien, President and Chief Executive Officer of Boart Longyear, commented, “Since late February, we have worked closely with our advisors, including Goldman Sachs and the Board’s independent advisors at Greenhill, to develop implementable recapitalization options. After discussions with many well-recognized and capable investors about numerous recapitalization and restructuring options, we are delighted to announce this agreement with Centerbridge.

“This recapitalization is an important step forward for Boart Longyear and its shareholders. We are preserving our existing shareholders’ opportunity to participate in the future prospects of the Company and the improving future margin potential to be realized when our markets do improve and we reap the benefit of the significant cost and efficiency actions the Company has taken over the past 18 months. Additionally, we anticipate the recapitalization will provide the Company with significant liquidity to weather the challenges of the current depressed markets for our drilling services and products and the financial strength to allow more time for those markets to recover. The financial flexibility and resources provided by the recapitalization will allow us to further build on our existing strengths in customer service and to make tactical investments in incremental, customer-focused product development.”

Centerbridge is currently the Company’s largest shareholder, with close to 20% ownership. As a result of its current ownership, it has been provided one seat on the Company’s Board of Directors, effective immediately. In addition, upon shareholders approving the remaining recapitalization transactions, Centerbridge will be granted additional board representation proportionate to its ownership of voting stock after completion of the recapitalization. Its maximum board representation at closing, however, may not equal or exceed half of the Board, reflecting the fact that this expanded partnership with Centerbridge is not a change of control transaction.

Jonathan Lewinsohn, Senior Managing Director of Centerbridge and recently appointed Boart Longyear Board member, said, “We are excited to partner with Richard, his management team and our fellow shareholders to provide a comprehensive capital solution for Boart Longyear. We believe this transaction will provide a solid base for the Company to work towards its goal of sustaining profitability through the mineral exploration cycle.”

Following are important highlights of the recapitalization:

  • Fully committed equity injection of $119 to $127 million
  • New term loans of up to $225 million
  • Total liquidity increased to approximately $240 million
  • Net debt reduced by approximately $120 million
  • Company is better positioned to sustain operations through to market recovery
  • Extends debt maturity and improves flexibility
  • Existing shareholders can participate through existing investment and, by exercising rights, may choose to further invest alongside Centerbridge

Mr. O’Brien added, “In summary, we believe this transaction with Centerbridge, an experienced investment firm and the Company’s largest shareholder, will ensure that the Boart Longyear franchise, which will have been operating 125 years next year, remains fundamentally strong and valuable.”

For additional details on the structure of the transaction, please refer to the presentation and written release that have been lodged on the Australian Securities Exchange. The latest news on the transaction can also be found at http://breakingnews.boartlongyear.com.

Disclaimer

This announcement contains certain “forward-looking statements.” The words “anticipate,” “believe,” “expect,” “project,” “forecast,” “estimate,” “likely,” “intend,” “should,” “could,” “may,” “target,” “plan” and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Due care and attention has been used in the preparation of forecast information. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the Company’s control and may cause actual results to differ materially from those expressed or implied in such statements. There can be no assurance that actual outcomes will not differ materially from these statements.

About Centerbridge

Centerbridge Partners, L.P. is a private investment firm with offices in New York and London and has approximately $20 billion in capital under management as of October 2014. The firm focuses on private equity and credit investments. The firm is dedicated to partnering with world-class management teams across targeted industry sectors to help companies achieve their operating and financial objectives.

About Boart Longyear

Approaching its 125th year anniversary in 2015, Boart Longyear is the world’s leading provider of drilling services, drilling equipment, and performance tooling for mining and drilling companies globally. It also has a substantial presence in aftermarket parts and service, energy, mine de-watering, oil sands exploration, and production drilling.

The Global Drilling Services division operates in over 40 countries for a diverse mining customer base spanning a wide range of commodities, including copper, gold, nickel, zinc, uranium, and other metals and minerals. The Global Products division designs, manufactures and sells drilling equipment, performance tooling, and aftermarket parts and services to customers in over 100 countries.

Boart Longyear is headquartered in Salt Lake City, Utah, USA, and listed on the Australian Securities Exchange in Sydney, Australia. More information about Boart Longyear can be found at www.boartlongyear.com.

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Contacts

Boart Longyear Limited
Monika Portman, +1 801-952-8451
Director, Corporate Communications
monika.portman@boartlongyear.com

Release Summary

Boart Longyear Enters into a Recapitalization Transaction with Centerbridge Partners, Successfully Completing Strategic Review

Contacts

Boart Longyear Limited
Monika Portman, +1 801-952-8451
Director, Corporate Communications
monika.portman@boartlongyear.com