Boom Logistics attracts merger proposal

By Euan Youdale13 July 2009

Australia's largest crane rental company Boom Logistics has received a merger proposal from its biggest shareholder.

The Harbrew Group, together with its associated entities, including McAleese Investments Pty, holds 12.2% of the business. Its unsolicited proposal came during confidential market soundings by Boom to raise equity and strengthen its balance sheet ahead of plans to develop the business.

"Harbrew's merger proposal is preliminary in nature and, as such, represents an incomplete proposal. It does, however, offer the prospect of an alternative approach to balance sheet strengthening and business development, as well as creating a substantially larger enterprise," said a Boom spokesman.

The evaluation process is expected to take several months during which the proposal will be assessed alongside other strategic opportunities, said Boom.

Despite the proposal, Boom's 2009 financial year guidance remains unchanged since its May 2009 market update. Net profit after tax (NPAT) is forecast at about AU$12 million (US$9.3 million) and earnings before interest, tax and amortisation (EBITA) is forecast at about AU$70 million ($54.2 million). In comparison, EBITA guidance for the 2010 financial year is down at a forecasted AU$65 million ($50.3 million).

"This guidance reflects the uncertainty of the prevailing market conditions and essentially assumes no revenue growth from the second half 09, no changes to Boom's contract profile and no further improvements over restructuring benefits already realised through headcount reductions in 2H09 - a benefit of approximately AU$13 million ($10 million)," added the company spokesman.

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