Shares in bulk haulage group McAleese (MCS) halved yesterday after they were relisted in the wake of the deal that will see Atlas Iron (AGO) keep some of its struggling WA iron ore mines open and exporting.
Atlas announced last Friday that it would keep two of its WA mines operating after days of talks with its major debt holders and in the US, and Australian contractors such as McAleese.
McAleese shares plunged yesterday morning on relisting after directors cut the company’s full-year earnings guidance by up to $20 million with the turmoil surrounding the Atlas mines to blame.
The shares dived 49% to a day’s low of 8.1c after they traded for the first time in three weeks. They ended at 8.1c.
MCS 1Y – McAleese shares plunge on relisting
McAleese confirmed that it will restart haulage services for two of Atlas Iron’s three iron mines in the Pilbara later this month.
McAleese said it plans to start providing trucking services to Atlas Iron’s Abydos and Wodgina mines this month after the miner and contractors agreed to restart operations.
But it also outlined financial impairments on troubled business divisions, and the earnings downgrade.
McAleese now expects to report earnings before interest taxation deprecation and amortisation (EBITDA) of around $70 million for 2014-15. It had told investors to expect EBITDA of between $85 million and $90 million when releasing its half-year results in February.
McAleese said net debt at the end of June would be between $160 million and $165 million, higher than previous guidance of between $145 million and $150 million. That net debt estimate includes expected asset sales worth around $10 million before the end of the financial year, directors said in yesterday’s statement.
"McAleese Group is compliant with all Financial Undertakings in its Syndicated Facility Agreement and, based on currently available information and expectations of the outcome of the discussions with Atlas, expects to be compliant at 30 June 2015,” directors said yesterday.
It also warned that it planned to take a non-cash impairment on its Heavy Haulage & Lifting division due to “low activity levels and a reduced pipeline of capital projects in the resources and infrastructure sectors across Australia" as well as a non-cash impairment of goodwill in its Bulk Haulage division.
"Trading conditions in the Specialised Transport division remain challenging, with reduced freight volumes impacting on the East-West corridor in particular,” directors said.
"Results from the Oil & Gas division continue to improve, reflecting significant investment in the fleet and safety systems and processes.
“The carrying value of all divisions will be assessed as part of the Company’s usual year-end processes,” directors added.
