While the practical completion has been achieved, an amount of $3 million has been held back subject to completion of an unsatisfied condition precedent regarding the Tomago manufacturing facility.
The companies are confident satisfaction of the condition precedent can be achieved and, after any costs of doing so are met, PPK will pay DMS a balance sum as final payment, executive chairman Rob Levison said.
“Finalisation of the COALTRAM acquisition is the first step in the PPK strategy of acquiring mining services businesses that have a strong product or service offering at a time in the cycle where their value may not be fully appreciated by the wider market,” he said.
The acquired assets include plant, equipment, inventory and hire fleet to a net tangible asset value in excess of $17 million.
The acquired businesses include the manufacturing, service and support of the trademark COALTRAM underground transport utility vehicle; manufacture and distribution of Australia's leading flameproof alternator for use in methane gas-prone underground coal mining environments; and equipment hire.
With about 100 COALTRAMS working in the Australian underground coal mining environment there is a strong product reputation to build upon, while the COALTRAM business continues to benefit from the original equipment manufacturer service and support revenue that is generated keeping this type of vehicle available for 24 hour use, Levison said.
Also, the COALTRAM vehicle has the potential to be exported to other major coal mining jurisdictions.
The acquisition of the flameproof alternator business also brings an already globally recognised product that is certified for use in high gas methane prone environments and is widely used by a number of global OEM underground equipment manufacturers.
“The board of PPK is delighted to have completed the first mining services acquisition and believe, in line with its published strategy, that PPK is receiving excellent value given the premium of net tangible assets to purchase price,”
“The board and management team of PPK look forward to welcoming the COALTRAM employees into the broader PPK business and building upon the strong reputation that the COALTRAM product has established in the Australian underground coal mining market over the last five years.”