LONDON (Alliance News) - Management Resource Solutions PLC Monday said its planned acquisition of D&M Group will not go ahead after the target walked away from the deal, a move that comes after Management Resource struggled to get the funding it needed.
When it revealed the potential acquisition of the manufacturing, wet plant hire and dry plant hire group early in March, Management Resource Solutions said it had agreed a AUD17.1 million debt facility with Halcyon Capital Management Pty Ltd to fund the deal, replace both companies' existing borrowing facilities, enable future investment and provide additional working capital.
However, in early April it said it had "become aware" that there are "potential difficulties" over drawing down the funds needed for completing its AUD6.7 million acquisition of Australia's D&M Group.
In late May, it said it had received a first replacement offer for debt financing to back the deal and expects further proposals to be tabled next week. The first offer was from an unnamed Australian bank, it said at the time, and was subject to a number of pre-conditions. The company said it expected to be able to draw down the first funds in the first week of July.
"It is with regret that the directors of MRS now have to inform shareholders that at close of business on 12 June 2015 they were notified that the vendors no longer wished to pursue negotiations and accordingly the proposed acquisition will not be proceeding," Management Resource Solutions said in a statement Monday.
"The directors maintain that the D&M Group would make an attractive addition to MRS but accept the notice given by the vendors. The transaction process and the ramifications of Halcyon's default have impacted the financial performance of the existing MRS business for the year ending 30 June 2015 and the company will provide shareholders with an update in this regard following the year end," it warned.
Management Resource Solutions shares have been suspended since April 8 when it first became apparent that Halcyon may not be able to deliver on its contractual funding. That suspension has now been lifted.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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