Boom Logistics considers merger proposal

Harbrew owns 12.2% of Boom and its unsolicited proposal came during confidential market discussions by Boom to raise equity and strengthen its balance sheet.

A Boom Logistics statement said; "Harbrew's merger proposal is preliminary in nature and, as such, represents an incomplete proposal. It does, however, offer the prospect of an alternative approach to balance sheet strengthening and business development, as well as creating a substantially larger enterprise".

Boom said the evaluation process was expected to take several months, during which the proposal will be assessed alongside other strategic opportunities.

In addition to being Australia's largest crane rental company, Boom Logistics has a large fleet of aerial platforms operated by its Boom Sherrin division. Sherrin has self-propelled booms and scissor lifts as well as one of the largest Australian fleets of truck mounted platforms, or ‘travel towers' as they are called in Australia.

Despite the proposal, Boom's 2009 financial year guidance remains unchanged since its May 2009 market update. Net profit after tax (NPAT) is forecast at about AU$12 million (US$9.3 million) and earnings before interest, tax and amortisation (EBITA) is forecast at about AU$70 million ($54.2 million). In comparison, EBITA guidance for the 2010 financial year is down at a forecasted AU$65 million ($50.3 million).

"This guidance reflects the uncertainty of the prevailing market conditions and essentially assumes no revenue growth from the second half 09, no changes to Boom's contract profile and no further improvements over restructuring benefits already realised through headcount reductions in 2H09 - a benefit of approximately AU$13 million ($10 million)," said the company.