Tat Hong

Published December 9, 2006

Tat Hong's Aussie unit buying North Sheridan By VEN SREENIVASAN TAT Hong Holding's Sydney-listed unit Tutt Bryant Group (TBG) is buying Queensland-based equipment hire specialist, North Sheridan Pty Ltd, for about A$51 million (S$62 million). TBG, which is 70 per cent owned by mainboard-listed Tat Hong, will pay A$31.7 million in cash and assume about A$19 million in finance liabilities on North Sheridan's books. TBG is already the operator of one of the largest crawler crane hire fleets in Australia and is also a leading multi-franchised distributor of construction equipment and cranes. And Tat Hong is the world's largest crane company by number of crawler cranes with a combined rental and sales fleet of over 500 mobile and crawler cranes throughout the region. According to Tat Hong president and chief executive Roland Ng, the deal will significantly increase TBG's footprint in the robust and fast-growing general equipment hire business in Australia. 'Australia is enjoying a huge infrastructure, mining and energy boom at the moment,' he said. 'Besides cranes and other heavy equipment, these activities are also driving a huge demand for general equipment.' TBG accounts for about 60 per cent of Tat Hong's revenue of some S$400 million. The company already has a small but lucrative general equipment rental business which generates about A$90 million revenue annually. And this business is expected to take off in a big way with the North Sheridan takeover. The transaction will initially be funded by bank debt. TBG intends to raise A$40-50 million by way of a renounceable rights issue in the first quarter of 2007 in order to refinance the acquisition, reduce its gearing levels and provide working capital for further growth. The takeover is expected to be completed by Dec 12. According to Mr Ng, it will immediately contribute to TBG and Tat Hong's bottom line as the companies head into their final January-March 2007 quarter for the current fiscal year.