Boart to reduce debt through equity raising

Boart Longyear plans to raise US$635 million through a fully underwritten equity offer.

Drilling services company Boart Longyear plans to raise US$635 million through a fully underwritten equity offer, the company said in a statement to the Australian Securities Exchange this morning.

According to the statement, the money raised will be used to reduce the company’s debt level by 78%.

“Successful completion of the recapitalisation announced today will allow us the repay all borrowings due in April 2010, thus removing near-term refinancing risk,” Boart Longyear chief executive officer Craig Kipp said.

Reducing debt will give the company a position of financial flexibility, leaving it in a better position to take advantage of the anticipated resources recovery, Kipp said.

In presenting its 2009 half year results, Boart announced a loss of US$5 million for the first half of the year, compared to a US$112 million profit at the same time last year.

The company also announced first half total revenue of US$463 million, a 53% decrease from US$985 million in 2008.

Despite the falling numbers, Kipp said he is happy with the company’ effort in a difficult market.

“I am pleased with our financial performance in the first six months of 2009 given the challenges we faced,” he said.

“During this period, which represented the most challenging operating environment our industry has experienced in many years, we generated positive EBITDA [earnings before interest, taxes, depreciation, and amortisation] and cash flow which allowed us to reduce our net debt.

“This, together with lower costs, resulted in improving trends in our financial results during the course of first half of 2009.”

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