by
Justin McCarthy | Jul 29, 2014
Key points
- Emeco Holdings Limited (Emeco), the parent and guarantor of the Emeco Pty Ltd bond, is the world’s largest rental provider of heavy earthmoving mining equipment (predominantly Caterpillar trucks and bulldozers) by written down value and has operated in the industry for over 40 years. It is listed on the ASX.
- Emeco Pty Ltd, has a senior secured USD335m 9.875% fixed rate bond, with a maturity date of 15 March 2019 that has minimal prior ranking debt and very strong asset backing. As of 31 December 2013, Emeco operated a fleet of 765 machines with an original cost of A$1.2bn, a written down value of A$717m, which has been independently appraised in February 2014 as having an orderly liquidation value of A$502m.
- The new DirectBond is available to wholesale clients only in minimum (face value) parcel sizes of USD200,000 and is currently offered at an indicative yield to maturity of circa 8.40% in USD and over 10% if swapped back into AUD.
|
Emeco Holdings Limited (Emeco) is the parent and guarantor of the Emeco Pty Ltd bond and has been listed on the ASX since 2006. Emeco is the world’s largest rental provider of heavy earthmoving mining equipment (predominantly Caterpillar trucks and dozers) by written down value and has operated in the industry for over 40 years.
Emeco has a presence in four of the world's leading mining countries - Australia, Canada, Chile and Indonesia, providing heavy earthmoving mining equipment to numerous major miners, smaller miners and contract miners, although it has recently announced it will exit the Indonesian market.
As of 31 December 2013, Emeco operated a fleet of 765 machines with original cost of A$1.2bn, and a written down value of A$717m, which has been independently appraised in February 2014 as having an orderly liquidation value of A$502m.
Other than a A$50m “super senior” revolving bank facility which is currently undrawn, the Emeco Pty Ltd senior secured USD 9.875% fixed rate bond has first call on the above equipment, with USD335m outstanding providing excellent asset/security backing.
As a result, the bond is rated BB- (Stable Outlook) by Standard and Poor’s, one notch higher than the parent and guarantor Emeco Holdings Limited.
While recent results have seen a material decline in profitability and EBITDA numbers as the slowdown in the mining sector reduces rental volumes and utilisation rates, the senior secured nature and very strong asset backing of the bond somewhat offsets the higher risk nature of Emeco’s business and gearing profile.
The new DirectBond is available to wholesale clients only in minimum (face value) parcel sizes of USD200,000 and is currently offered at an indicative yield to maturity of circa 8.40% in USD and over 10% if swapped back into AUD.
Wholesale investors with a login and password can view the Emeco Pty Ltd 9.875% 15 March 2019 USD bond fact sheet at the following link.
Please speak to your FIIG representative if you are interested in the Emeco Pty Ltd 9.875% 15 March 2019 USD bond.
All prices and yields are a guide only and subject to market availability. FIIG does not make a market in these securities. Copyright The contents of this document are copyright. Other than under the Copyright Act 1968 (Cth), no part of it may be reproduced or distributed to a third party without FIIG’s prior written permission other than to the recipient’s accountants, tax advisors and lawyers for the purpose of the recipient obtaining advice prior to making any investment decision. FIIG asserts all of its intellectual property rights in relation to this document and reserves its rights to prosecute for breaches of those rights.
Disclaimer Certain statements contained in the information may be statements of future expectations and other forward-looking statements. These statements involve subjective judgement and analysis and may be based on third party sources and are subject to significant known and unknown uncertainties, risks and contingencies outside the control of the company which may cause actual results to vary materially from those expressed or implied by these forward looking statements. Forward-looking statements contained in the information regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. You should not place undue reliance on forward-looking statements, which speak only as of the date of this report. Opinions expressed are present opinions only and are subject to change without further notice.
No representation or warranty is given as to the accuracy or completeness of the information contained herein. There is no obligation to update, modify or amend the information or to otherwise notify the recipient if information, opinion, projection, forward-looking statement, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.
FIIG shall not have any liability, contingent or otherwise, to any user of the information or to third parties, or any responsibility whatsoever, for the correctness, quality, accuracy, timeliness, pricing, reliability, performance or completeness of the information. In no event will FIIG be liable for any special, indirect, incidental or consequential damages which may be incurred or experienced on account of the user using information even if it has been advised of the possibility of such damages.
FIIG provides general financial product advice only. As a result, this document, and any information or advice, has been provided by FIIG without taking account of your objectives, financial situation and needs. Because of this, you should, before acting on any advice from FIIG, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If this document, or any advice, relates to the acquisition, or possible acquisition, of a particular financial product, you should obtain a product disclosure statement relating to the product and consider the statement before making any decision about whether to acquire the product. Neither FIIG, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice. Any reference to credit ratings of companies, entities or financial products must only be relied upon by a ‘wholesale client’ as that term is defined in section 761G of the Corporations Act 2001 (Cth). FIIG strongly recommends that you seek independent accounting, financial, taxation, and legal advice, tailored to your specific objectives, financial situation or needs, prior to making any investment decision. FIIG does not make a market in the securities or products that may be referred to in this document. A copy of FIIG’s current Financial Services Guide is available at www.fiig.com.au/fsg.
The FIIG research analyst certifies that any views expressed in this document accurately reflect their views about the companies and financial products referred to in this document and that their remuneration is not directly or indirectly related to the views of the research analyst. This document is not available for distribution outside Australia and New Zealand and may not be passed on to any third party without the prior written consent of FIIG. FIIG, its directors and employees and related parties may have an interest in the company and any securities issued by the company and earn fees or revenue in relation to dealing in those securities.