MINING and oil and gas services company Resource Equipment (REL) has endorsed a takeover offer from shareholder Pump Services that values the company at about $115.5 million.
At the time of going to press, Pump Services had a 59.31 per cent stake in the group, with the offer period scheduled to close on 3 February.
The cash offer, made in December, was to buy REL shares at 26 cents each – an 86% premium to the company’s Australian Securities Exchange closing price of 14 cents the day before the offer was made.
REL said two of its directors, Keith Lucas and Peter Hutchinson, had sold their shares into the offer, though the remaining company directors were yet to make a decision.
The company made a net loss of $4.5 million after tax in the 2013-2014 financial year, with the company to focus on improving the use of its rental fleet and delivering on oil and gas segment opportunities over the year ahead.
Equipment from REL, which designs and installs high density polyethylene pipe systems as well as mine pumping equipment and dewatering systems, has been used on major pipeline projects including Pluto, Bayu-Undan, the Trans-Thailand pipeline and QSN3.
The group’s fleet of oil and gas equipment includes a substantial range of pumps covering all types and sizes of water winning, centrifugal and positive displacement pumps.
Pump Services, which held a 12.71% voting stake in REL before making the offer, is wholly owned by Texan entrepreneur Walter Eugene (Loddie) Naymola Jr.
In its bidder’s statement, Pump Services said it was likely REL’s share price would fall in the absence of the offer – adding that the shares were illiquid and that the company had never paid a dividend in its incarnation as a resource equipment business.
Should Pump Services succeed in taking over the company, it would concentrate management time and capital on its pump equipment rental business and consider expanding services in and to the construction, municipal and oil and gas industries.
It would also review existing operations, assess the profitability of the group’s assets and consider whether to consolidate branches which are located close to each other.