Neil Dowling
November 18, 2009 08:07am
TIGHTLY held Perth specialist engineering company Coote Industrial has raised $40 million and embarked on a debt reduction and working capital expansion program.
The Maddington-based company - which last financial year posted revenue of $317 million but debt charges sent profit into an uncharacteristic $4.54 million loss - is a quiet achiever in WA business circles.
Coote Industrial operates in applications covering agriculture, aerospace, construction, defence, maritime, rail, resources and power generation.
It owns successful divisions including Gemco Rail, rail support group Momentum and tank maker Convair and has amalgamated its Coote Energy, Hedemora and Drivetrain subsidiaries into a new arm, Drivetrain Power and Propulsion. It also has the European-based turbocharger business, Turbomeca.
It has divisions and subsidiaries operating from 54 locations spread from Maddington to the US, Sweden, Singapore, the Philippines and New Zealand.
The capital raising announced today comprised a $30 million placement to institutional and sophisticated investors, plus a $10 million share purchase plan offered to existing shareholders.
Both were undertaken at 26c a share, a discount to the current 34c/share price.
Coote managing director Mike Coote said the funds would be used to ``pay down debt, improve liquidity and provide working capital for increasing volumes of forward orders and contracted work''.
``The new capital will also enable Coote Industrial to concentrate on a number of new growth opportunities while completing the two remaining key objectives determined for 2009/10, being settlement of the second tranche of locomotives sold to Greentrains and the divestment of the logistics businesses.''
Coote is selling its South Spur Logistics division because it doesn't fit with the technical-base of the other entities.
The company said while it posted a profit loss in the past year, it retained a strong $300 million-plus revenue base.
Mr Coote said while he envisaged financial constraints to continue into the current financial year, ``plans are in place to to further rectify liquidity''.
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