Boart Longyear is considering a capital raising to cut debt and brace for lower 2009 earnings as the demand for mining services comes to a standstill.
The mining services company hopes to cut at least $83.3 million from its $1 billion debt this year and refinance $761.9 million in debt facilities that mature in April 2010.
At the company’s annual meeting in Sydney yesterday, Boart CEO Craig Kipp said the company is considering a number of alternatives to save money.
“Our advisers are looking at other options including equity, including mezzanine financing, asset sales … everything you would normally consider is on the table,” he said.
Boart predicts its total revenue for 2009 will be 35-45% lower than its $2.6 billion earnings for the previous year.
Kip did not rule out further job cuts at the meeting and said a “meaningful” recovery in demand was unlikely until the second half of this year.
Last year, Boart cut its global workforce by 30% and announced a series of restructuring changes to balance its cashbook.
“While we have not yet experienced a significant recovery in our products order backlog or drill rig utilisation, certain customers are gradually putting rigs back to work at sites around the world,” he said.
Despite an unsure future, Kipp said the company will be able to pay its debt even under the “worst case scenario”.
“We aren’t seeing a lot of new contracts … but the rate of decline certainly has slowed down,” he said.