Resource Development Group Ltd (RDG) has entered into a conditional Share Sale Agreement (SSA) to acquire Perth-based Central Systems, a multi-disciplined, self-performing construction contractor and provider of remedial and maintenance services to the mining, energy and infrastructure sectors in Australia.
Centrals’ contracting services include civil, SMP (structural, mechanical & piping), E&I (electrical & instrumentation) and maintenance, remedial and protective coatings services. Its primary markets are the mining, oil & gas, defence and utilities sectors in Australia.
Centrals has a blue chip client base including Samsung, Fortescue Metals Group, BHP Billiton, Rio Tinto, Xstrata, Newcrest, CBH and BP for whom they complete both greenfields and brownfields projects. Major contracts being delivered by Centrals include a circa $100 million contract with Samsung for the Roy Hill Bridges Project, underground concrete contracts for Newcrest’s Cadia mine site, defence-related protective coatings contracts for both NSM Australia and BAE plus multiple brownfields projects under a multi-year panel contract with BHP Billiton Iron Ore.
Under the terms of the SSA, RDG will issue Centrals’ five shareholders a total of 497,175,172 RDG shares for 100% of the issued capital of Centrals. Centrals’ shareholders will then own in aggregate 78% of the fully diluted issued capital of RDG, with 4 shareholders each holding 16.58% and the other shareholder 11.7%.
RDG proposes that, at completion of the transaction, it will invite Centrals’ directors Richard Eden and Andrew Ellison, to join the RDG board. In addition, up to 2 directors of RDG may resign from the Board of RDG.
“We are delighted to be able to announce the acquisition of such a capable construction company who is performing strongly in these difficult market conditions. RDG and Centrals share many common clients and the combined entity will be able to provide a credible design & construct offering to the market which we are confident will be of great interest to both our existing and new clients alike. With the addition of Centrals, the RDG Group will be able to offer whole of project lifecycle services spanning environmental, studies, engineering design, construction, maintenance and remedial services,” says RDG’s managing director Jeff Brill.
“The RDG directors believe that with this increase in scale and capability, the enlarged group should now be capable of targeting revenues in excess of $200 million annually subject to prevailing market conditions, and will provide RDG with a great base from which to continue its growth. It’s no secret that the market is tough and we expect these conditions to persist for some time, but the value in the increase in scale and breadth of RDG’s operations that Centrals brings is immense and gives us a greatly expanded future.”