The Environmental Group Limited (EGL) has secured a deal to purchase RCR Tomlinson subsidiary RCR Energy Service.
Melbourne-based EGL is dealing with the beleaguered engineering group’s administrator McGrathNicol to make the acquisition, which should be completed within the next week.
RCR Energy Service’s primary focus is on commercial gas and steam boilers, as well as thermal oil heaters and hot water heaters.
Perth-based RCR Tomlinson made headlines last November with the announcement of its administration due to insurmountable money problems, including around $630 million in debts.
The company saw a massive 60 per cent share wipe out in August last year and by the time of its administration its value hovered around 85–87 cents, down from $2.12 at the end of July.
In particular, the company suffered severe financial issues related to several failed solar farm investments — two Queensland solar projects saw a combined write down of $57 million, for example.
Despite this, EGL has cited RCR Energy Service’s “strong track record of profitability” as an attractive quality of the acquisition.
The company generated $21.5 million in sales and $1.5 million in earnings before interest and tax (EBIT) in the 2018 financial year.
RCR Energy Service’s senior management team will transfer to EGL once the acquisition is complete and the company will operate under the name Tomlinson Energy Service.
“EGL will continue to pursue new growth and acquisition opportunities that fit our environmental platform,” EGL chairman Lynn Richardson said.
“This will provide existing and new shareholders with the benefits of investment in a company committed to reducing pollution and the effective use of world resources.”
EGL did not reveal the cost of the acquisition at the request of McGrathNicol, but this information should be made available by the end of January. The acquisition will be funded by EGL’s existing debt facilities.