Shares in drilling and mining services business Boart Longyear Ltd. (ASX: BLY) have jumped today after it announced a recapitalisation agreement with U.S. private equity business Centrebridge Partners. The news of big support from a private investor has sent the share flying 40% higher and gives Boart time to wait until the market for its core drilling services begins to strengthen again.
As a result of an initial equity placement transacted today Centerbridge's ownership in Boart has increased from 12.7% to 19.9%, via the issue of US$5.6 million worth of equity in Boart to Centerbridge. In late December, Centerbridge's ownership will increase from 19.9% to 37% as a result of a Follow-On Conditional Placement.
Boart's drilling teams operate in more than 40 countries looking for a wide range of commodities including, gold, copper, nickel, zinc, uranium and other metals or minerals.
However the general downturn in commodity prices and capital expenditure on new mining projects has seen Boart's market value collapse in half since February 2014 and long-term shareholders will likely view today's news with relief rather than pleasure.
Boart is not alone in being hit hard recently with larger mining services and engineering businesses like Monadelphous Group Limited (ASX: MND) and Worleyparsons Limited (ASX: WOR) seeing their own share prices hit 52-week lows recently.
