NRW Holdings – Transformational Acquisition of Leading East Coast Contractor Golding Group

NRW Holdings Ltd (ASX:NWH) has acquired Golding Group, a NSW and Qld civil infrastructure, urban and mining services company. The $85m enterprise value acquisition increases NRW’s presencein adjacent and complementary sectors. Golding’s revenue of $369m for FY17 was comparable to NRW’s of $370m, implying a near doubling of the scale of NRW following the transaction.

Highlights

NRW to acquire Golding Group Pty Ltd (“Golding”) for an enterprise value of $85M

• Golding is a leading civil infrastructure, urban and mining services company operating in Queensland and New South Wales
• Acquisition delivers on NRW’s strategy to expand presence and service offering into adjacent and complementary sectors with Tier 1 client base
• Golding FY17 revenue of $369M and EBITDA of $53M – implied acquisition multiple is 1.6x EV/EBITDA
• With an order book of ~$0.5B, including $275M scheduled for delivery in FY18, Golding delivers a step change in scale
• Highly EPS accretive for NRW – over 60% on a pro forma FY17 basis
• Experienced management team to remain with the business

Acquisition to be funded via new debt facilities and an equity placement

• Consideration is payable in cash on completion funded via:
  • $48M acquisition debt facility
  • $25M equity placement
  • existing cash reserves
• Placement offer price will be determined via a variable price bookbuild with a floor price of $0.64 per new share and a maximum price of $0.68. The floor price of $0.64 represents a discount of:
  • 3.0% to NRW’s closing price of $0.66 per share on 11 August 2017; and
  • 5.0% to NRW’s 5 day VWAP of $0.674 per share, up to and including 11 August 2017
• Separately, NRW will undertake a share purchase plan (SPP) capped at $5M

NRW FY17 Results

• Revenue of $370.3M, EBITDA of $58.8M and NPAT of $28.5M
• Balance sheet restructured – net debt to $20.8M at year end

Group outlook

• Continued recovery in core markets together with high levels of tendering activity
• Current combined Group order book over $1.4B, including ~$625M scheduled for delivery in FY18

Jules Pemberton, NRW’s CEO & Managing Director, said:

“Golding is a strategically and financially compelling acquisition, with the potential to deliver growth across the business and drive NRW shareholder value.

Golding is a business with strong market positions across its operating divisions, underpinned by longstanding Tier 1 client relationships and an experienced management team. The business is highly complementary to NRW and with a well-recognised brand, represents an attractive platform for our company’s further expansion into the growing East Coast civil and infrastructure markets and coal and metalliferous mining sectors.

We are excited by the opportunities ahead for the expanded NRW, to leverage the additional capabilities and regional strengths across the combined group and further capitalise on our strong market position in a rapidly consolidating sector.

There is a strong cultural alignment between our businesses. Together with our combined workforce of nearly 2,000 people supporting more than 40 projects around Australia, we are well placed to offer a diverse range of services and project solutions to clients across the infrastructure, resources and urban sectors.”

To view the investor presentation, please click here.