SKILLED to Acquire Broadsword (Australia)

SKILLED Group announced that it has entered into an agreement to acquire Broadsword Marine Contractors Pty Limited (“Broadsword”) for an initial consideration of $48.8 million, and further deferred consideration of $26.7 million payable over 3 years; for a total consideration of $75.5 million.

Broadsword is a Northern Territory based, highly regarded marine services provider with exposure to the full lifecycle of activity in the Australian oil and gas sector.

Broadsword provides inshore and offshore ‘shallow water’ services to a high quality client base, with a fleet of small to medium vessels (typically less than 40 metres), and has an established presence in the Northern Territory, Western Australia and Queensland.

The acquisition is highly complementary to the existing manning and marine logistics services provided by the Group’s growing Offshore Marine Services business and the OMSA JV; and the acquisition builds increased scale, geographic reach and service breadth in an attractive high skill, high margin segment.

Broadsword has a blue chip client base, an experienced management team and is enjoying strong growth in demand for its services. It is well positioned to benefit from the strong pipeline of opportunities in the oil and gas sector, including floating LNG projects. These opportunities extend to all phases of exploration, construction, operations and maintenance.

SKILLED Group will provide oil and gas expertise, safety systems, client reach, back office systems and financial strength which will further enhance Broadsword’s market position and service capability.

Broadsword’s FY14 EBITDA is forecast to be approximately $16-$17 million, with strong growth potential over subsequent years (FY13 EBITDA ~ $14 million on total revenue of ~$60 million).

The acquisition will be EPS accretive, with greater than 10% cash EPS 2 growth expected in FY14.

A further contingent amount may be payable if 3 year EBITDA growth exceeds agreed stretch targets.

The post integration EV/EBITDA multiple is expected to be around 4.0 times Year 3 EBITDA.

The acquisition will be wholly funded through the Group’s existing debt facilities. The Group’s gearing level post transaction will remain less than 20 per cent (Debt/Debt plus Equity).

The transaction is expected to be completed in July 2013.

SKILLED Group Chief Executive Officer, Mick McMahon commented, “This is a carefully targeted and financially compelling acquisition that extends our capability, geographical reach and exposure to oil and gas, while enabling an extension of service to our clients”.

“We are very pleased to have secured the ongoing services of Broadsword founder, Grant Farris, who will continue to manage the business. Grant has built a successful business and is well respected by his clients”.

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Press Release, June 17, 2013