Tag Archives: Primepower Queensland

Babylon Pump & Power adds Queensland hub to Western Australia base

Mining consumables, Mining equipment, Mining services, Water management, , , ,

Babylon Pump & Power has established a rental service base on the East Coast of Australia with the completion of its acquisition of Primepower Queensland.

The company announced the deal with the leading diesel engine specialist back on July 26, saying it would pay for the company with a mixture of cash, shares, delayed performance payments and assumption of debt.

Primepower was founded in Mackay, Queensland, in 2004, and has a client base including Peabody, Fortescue Metals Group, BHP Mitsubishi Alliance, Anglo American, Wesfarmers and Minerva.

The Primepower buy, according to Babylon, offers:

  • Geographic and technical expansion;
  • Diversification of commodity exposure;
  • Purchasing power and contract synergies;
  • East coast platform to introduce rental services; and
  • Workshop flexibility with no additional corporate overhead.

Post-acquisition, Babylon will be one of the largest independent and diversified engine re-builders in Australia, poised for growth in specialist rental nationally, with a focus on Australia’s two key mining states, Western Australia and Queensland, the company said.

Babylon Pump’s business development efforts power up

Equipment maintenance, Mining equipment, Mining mergers and acquisitions, Mining services, Power supply for mines, , , , , , , , ,

Babylon Pump & Power Ltd has entered into a conditional agreement for the acquisition of diesel engine specialist Primepower Queensland for up to A$4.2 million ($2.9 million) in cash, shares, delayed performance payments and assumption of debt.

Mackay-based Primepower was founded in 2004 and is a specialist in Cummins engine repairs and rebuilds to the Queensland resources sector, Babylon said, with the acquisition complementing Babylon’s Western Australia-based diesel maintenance division and diesel generated power and pumping rental business.

The company has grown into a highly regarded specialist provider of diesel maintenance to the resources sector with a client base including Peabody, Fortescue Metals Group, BHP Mitsubishi Alliance, Anglo American, Wesfarmers and Minerva, Babylon said. Primepower generated unaudited annual revenue of around A$9.1 million for the year to June 30, 2019, and adjusted net profit of some A$600,000.

“The acquisition is Babylon’s first move into the eastern states and forms part of the company’s growth strategy, and provides an ideal platform to expand Babylon’s successful specialty equipment rental business into the East Coast,” Babylon said.

The acquisition provides Babylon’s Diesel Maintenance division with extra scale, in addition to technical expertise in Cummins engines to complement its expertise in Caterpillar engines, Babylon Executive Chairman, Michael Shelby, said. “[It] will be the perfect springboard to introduce our power and pumping rental offering to the East Coast market,” Shelby said. “The acquisition also provides commodity diversity, exposure to a larger client base, many with national operations, and will deliver a step-change in our operating scale and revenue.”

Shelby hinted that this may not prove to be the end of the company’s M&A efforts.

“The resource services and related sectors remain very fragmented, and it has become apparent that there are a number further potential complimentary acquisitions and new business development opportunities available,” he said. “While focusing on its core business, it is Babylon’s intention to explore thoroughly opportunities to expand in conjunction with its strong organic business growth.”

The consideration is comprised of cash on completion of A$1.7 million (adjusted pro-rata for net assets), A$600,000 in Babylon shares, assumption of a A$500,000 trade finance facility, deferred consideration of A$1 million over two years (adjusted for net asset value), additional deferred consideration of A$500,000 conditional on a revenue requirement of A$8.9 million being met in the 2020 financial year.

The Primepower purchase will see Babylon acquire net assets including stock and work in progress of A$3.1 million, and goodwill and plant and equipment valued at A$1.1 million. As part of the deal, Primepower founder and owner, Michael Donegan, will also remain a Primepower executive for a minimum 12 months.