McAleese searches for recapitalisation deal

Troubled haulage firm suspends share trading again as market awaits update of ‘strategic process’

McAleese searches for recapitalisation deal
McAleese has suspended trading in its shares for the second time in 12 months.


Listed McAleese Group is seeking more cash from creditors and has postponed its half-yearly report and gained a suspension of its shares until Monday.

The diversified haulage company has offered a debt-for-equity swap amongst options to solidify its financial position as it goes about a restructuring it has dubbed the "strategic process", being undertaken by Moelis & Company.

"The Company is in discussions with its lenders in relation to a number of alternative recapitalisation proposals, including with external providers of new capital which would involve those parties acquiring the Company’s existing debt and the potential issuance of new equity," the firm says in a statement to the Australian Securities Exchange (ASX).

"Discussions in relation to these proposals remain confidential and incomplete.

"Further consideration and negotiation is required before the Company will be in a position to provide further detail to the market.

"McAleese Group notes that it has the continued support of its lenders while the Strategic Process continues.

"While the proposals would result in a material reduction in the Company’s debt, none of the proposals are expected to have an effect on McAleese Group’s trade creditors or the provision of services to customers."

The company hopes to make a definitive statement about its position on March 7 after saying a month earlier it had received expressions of interest on a recapitalisation from "multiple parties".

It said at the time it "expects to recognise between $35 million and $55 million of non-cash impairment charges against the carrying value of its assets" in its first-half results after divisional reviews "in the context of the continuing decline in commodity prices and activity in the resources sector".

The suspension yesterday, the second in 12 months, comes a month after it gained a waiver of a breach of financial undertakings in its syndicated facility agreement.

Its previous trading suspension, which lasted three weeks with the addition of an extension, saw a services-for-equity deal struck with major bulk haulage customer Atlas Iron.

The miner says it will hold creditors and shareholders meeting next month to vote on its own debt restructuring effort that will see it issue more shares.

 "The iron ore price has continued to present a challenge but the Company and its contractors have responded with further savings," Atlas MD David Flanagan notes in its interim results report.

"This is a big achievement that has created a leaner, more sustainable company.

"The debt restructure agreement announced on 23rd December 2015 will provide interest savings and reduce Atlas’ debt burden by nearly 50 per cent."   

Atlas made a first-half net loss of $114.4 million compared with a previous first half loss of $1.086 billion.

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