HRL expands across the ditch

FORMER geothermal energy concern HRL Holdings will be forced to recapitalise to meet the requirements of the Australian Securities Exchange listing rules following its move into the environmental consulting and hazardous material analytical laboratory business.

Staff Reporter

Last year HRL (then known as Hot Rock Ltd) completed merger with consultancy Octief and more recently announced the acquisition of New Zealand-based Precise Consulting, acquisitions which the regulator means change the nature and scale of its business.

Like Octief the Christchurch-based Precise undertakes contaminated land analysis, soil sampling, dust and air quality monitoring, and asbestos auditing.

Its addition to the HRL portfolio is intended to be a major source of growth of the company.

The transaction will involve a maximum purchase price of $NZ7 million, comprising a $NZ5 million cash component and an earn-out consideration of up to $NZ2.5 million, depending on Precise’s earnings in calendar 2015.

If Precise generates less than $NZ1.9 million no consideration will be paid, but the fee will gradually scale up to a maximum of $NZ2.5 million for earnings of $NZ2.5 million.

The deal is conditional on HRL being able to secure the funds via debt financing. HRL says preliminary discussions with its bankers have been positive.

Recomplying with the ASX listing rules means the HRL will need to test the market and complete a new capital raising and meet share spread requirements.

It expects to finalise the process in early March.

Precise’s owner, Andre Halkyard, will maintain his position of general manager for at least three years as part of the deal.

Octief was secured in mid-2014 from for the issue of up to 640 million HRL shares as part of a merger that saw the vendors take up board positions on the former geothermal concern.

HRL maintains its interests in several Victorian hot rock projects, but they are no longer considered a core focus.

The licences have just been renewed for five years and work programs have been announced to assess the geothermal resource potential of the company’s two Otway Basin licences near the towns of Portland and Warrnambool.