Adsteam To Buy Howard Smith Ltd.

Thursday, March 15, 2001
Australia's largest marine towage group Adsteam Marine Ltd. has agreed to buy Howard Smith Ltd's Australian and U.K. towage businesses for A$500 million. "The transaction is in line with Adsteam Marine's previously stated objective of using strategic international acquisitions to grow its harbor services operations into a global business," David Ryan, Adsteam's managing director said. The purchase would double Adsteam's earnings before interest, tax, depreciation and amortization (EBITDA) and enhance its earnings per share before goodwill in the first full year of operations. Howard Smith said around A$250 million of the sale proceeds would be used to fund share buybacks both on- and off-market, and the balance would repay debt and fund potential acquisitions. It subsequently announced it would initially buy back a maximum of A$80 million worth of shares. "While towage has provided Howard Smith with excellent returns over many years, the sale enables us to concentrate resources on the company's core distribution assets," Ian Tsicalas, the group's managing director said. The company distributes hardware and industrial supplies. Adsteam plans to use a A$330 million bank debt facility from National Australia Bank Ltd to finance the deal which includes the remaining 50 percent of its Australian towage joint ventures with Howard Smith as well as Howard Smith's wholly-owned Australian and UK towage businesses. It also plans to undertake an equity raising of A$180 million, underwritten by ABN AMRO Rothschild and UBS Warburg. Shares in Adsteam, which said the deal would make it the world's largest independent harbor towage group, last traded at A$2.36 on March 8 ahead of a trading halt on March 9. - (Reuters)

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