Tuesday 11 September 2018 by FIIG Research Company updates

Company updates – Barminco, Impact Group, Mackay Sugar, NEXTDC, SCT, new and updated Factsheets

This week, company results from Impact Group and NEXTDC, Barminco merger update and Sunrise Dam contract renewal, Mossman Mill deal gains traction for Mackay Sugar, IPO speculation for SCT, new and updated factsheets

Barminco/Ausdrill merger update and Sunrise Dam contract renewal

On 7 September 2018, mining services company Barminco Holdings announced that it had renewed its Sunrise Dam contract with AngloGold Ashanti. The extended contract will be for a period of five years and based on the current mining schedule, is worth approximately A$700m.

The contract announcement is a significant positive update for the company as we had flagged its renewal as one of the major uncertainties for the coming 12 months.

Barminco remains subject to a takeover offer from industry peer Ausdrill Ltd which would create Australia’s second largest mining services company. An important step in the merger was recently achieved, with the issue of an independent expert report confirming that the proposed transaction was fair for Ausdrill shareholders. Completed is expected late October.

Read the full research update here.

Read our Investment Strategy Group’s note on Barminco here. This can be read in conjunction with the Research update.

Impact Group FY18 results – Outperform recommendation reiterated

Impact has provided its summary FY18 management accounts and a trading update. Full audited accounts should be available towards the end of September. Given the limited financial details of the release, we will not update our model until full accounts are available.

Read the full reports for retail and wholesale investors here.

Mackay Sugar – Mossman Mill sale gains some funding

On 7 September 2018, this Article reported, that the Mossman Mill is a step closer to being returned to the region’s sugar cane growers after funds were provided to progress the deal.

The Douglas Shire Council agreed to support the cooperative’s acquisition with a A$250,000 grant. Further funding is still needed.

The sale of the mill is credit positive, providing some funds and removing a loss making business from the balance sheet. The mill was owned by growers until Mackay Sugar Ltd acquired it in 2012. Growers in both Mossman and the Tablelands are supportive of the deal and agreements are currently being signed.

NEXTDC FY18 results for wholesale and retail clients – Credit outlook negative

Last week, NEXTDC announced its FY18 results. We reiterate our Market Perform recommendations on NEXTDC’s 6.25% notes due 2021, its 6.00% notes due 2022 and its 3mBBSW+3.75% notes due 2022. Our credit outlook remains negative.

While the business is performing strongly and liquidity remains excellent, the bonds have already rallied significantly and we believe further price appreciation is unlikely. Further credit metrics are forecast to weaken as the Group develops new data centres.

Read the full reports for retail and wholesale investors here.

SCT speculation on initial public offering (IPO)  

On 10 September 2018, the AFR reported a potential IPO of privately owned 44 year old transport and logistics company SCT Logistics.

The company is believed to be mulling the proposals, before deciding whether to sign up to the 2019 asset auction or initial public offering pipelines, or both.

The pitching is said to come as bankers seek to benefit from the purple patch for deal activity and restock the pipeline with potential deals for next year. Private equity funds are cashed up and deal making confidence is rising in Australian boardrooms, which is building expectations of rising M&A activity heading into the New Year.

New and updated Factsheets

Wholesale Factsheets

  • Australia National University 3.27% Oct 29 senior unsecured notes here
  • HCA USD 5.25% Apr 25 1st Lien notes here
  • JEM CCV 4.73% Jun 22 senior secured CPI linked notes here
  • Newcastle Coal Infrastructure Group USD 12.50% Aug 31 senior unsecured notes here
  • Newcastle Coal Infrastructure Group 4.40% Sep 27 senior secured notes here
  • NEXTDC 6.25% Jun 21 senior unsecured notes here
  • NEXTDC 6.00% Jun 22 senior unsecured notes here
  • NEXTDC 3M BBSW+3.75% Jun 22 senior unsecured notes here
  • Praeco 7.13% Jul 22 senior secured notes for wholesale clients here
  • Stockland Trust 8.25% Nov 20 senior unsecured notes for wholesale clients here
  • Stockland Trust 4.50% Nov 22 senior unsecured notes for wholesale clients only here
  • Transocean Guardian USD 5.875% Jan 24 secured notes for wholesale only here
  • Transocean Inc USD 9.00% Jul 23 senior unsecured notes for wholesale clients only here

Retail Factsheets

  • Australia National University 3.27% Oct 29 senior unsecured notes here
  • JEM CCV 4.73% Jun 22 senior secured CPI linked notes here
  • Praeco 7.13% Jul 22 senior secured notes here
  • Stockland Trust 8.25% Nov 20 senior unsecured notes here

Please note yields are accurate as of 12 September 2018, subject to change.

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