The sale will occur in two stages. The first stage will involve the sale to MB Holding of 51% of a new Century holding company (Century) that owns the Century assets and businesses. Downer EDI will hold the remaining 49% interest. This transaction will be substantially completed by December 17, 2007 and MB Holding will pay Downer EDI US$70.05m for its 51% interest.
The balance of Downer EDI's interest in Century will be sold to MB Holding, either at the end of three years under a Downer EDI put option, or earlier should MB Holding elect to exercise a corresponding call option. The price for the remainder of Century will be net assets at the time.
Downer EDI has guaranteed the EBIT performance of Century until the earlier of MB Holding exercising its call rights over Downer EDI's 49% interest or the exercise of the put option by Downer EDI at the end of the 3 year option period. Actual and budgeted EBIT performance of Century is in line with the guaranteed sum, with any exposure capped at $US 5.4 million in any one year.
The sale will not impact current earnings guidance.
Commenting on the sale, Downer EDI CEO, Brent Waldron said: "While our intention to sell Century Resources has been flagged for some time our focus has been on structuring a transaction that realizes the greatest value for our shareholders and preserves the value of the business during the sale process".
MB Holding is one of the fastest growing and largest oilfield services companies in the Middle East with turnover of approximately US $600 million and total assets in excess of US $660 million.
MB Holding Chairman Mohammed Al-Barwani said: "The acquisition of Century strengthens our presence in the Asia Pacific and positions us well in our overall strategy of becoming a global player providing integrated oil field services".
Brent Waldron stated: "Both parties will benefit from the creation of a partnering arrangement which combines complementary skills and a strong industry presence," he said.
The proceeds will be used to reduce debt and meet other US dollar denominated trade payables.
Both shareholders are subject to non-compete obligations and have equal rights on key decisions.
The sale is subject to approval by the Foreign Investment Review Board.
Century is a market leader and foremost provider of oil, gas and geothermal drilling services, with one of the most comprehensive fleets of drilling rigs in the Asia Pacific Region. It is the largest provider of medium to heavy land drilling contracting services to the South East Asian and Australasian oil, gas and geothermal markets. Century Resources owns and operates 11 land and drilling rigs in its core markets.
MB Holding is an oil and gas services company with turnover of around US $ million and total assets of more than US $600 million. Employing more than 4000 people it services the oil and gas sectors with drilling and integrated oilfield services, exploration and production services as well as trading and marketing and the mining and processing of minerals.
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