IN FINANCIAL distress the McAleese Group has managed to receive a waiver of a breach of financial undertakings from its bankers.
Back in December the company released an ASX Market Announcement forecasting that it would not meet its financial obligations to its Syndicated Facility Agreement citing "challenging conditions" as the reason.
Those challenging conditions remain and yesterday the business released an announcement that the waiver was granted "subject to the continuation of the strategic process currently being undertaken".
McAleese also has reporting obligations to its financiers on strategic process and each financier must be satisfied with the reports.
The waiver relates to figures from the half year ended on December 31.
This comes as a major shareholder HK Price announced they were ceasing to be a substantial holder on January 15.
ABC business reporter Stephen Letts has reported that at the end of the 2015 financial year McAleese had total borrowings of $205 million and was $170 million in debt.
He also reported that the company was working on an "extensive recapitalisation plan" which had attracted interest from "offshore hedge funds and industry players".
ASX records show TH Investments based in Singapore this month purchased six million shares in the company worth just over $300,000, increasing their voting power from some 9.22% to 11.38% and total shares to more than 32 million.
McAleese fights on
McAleese remains confident that it can maintain its financial obligations.
In its December update the business said a successful tender to renew an LPG cartage contract Elgas Limited was expected to deliver total revenues of about $50 million per year over the five years of the contract.
The revenue is set to improve McAleese's EBITDA and meet the Oil and Gas division's internal hurdle rates.
That deal involved the Group selling about $9 million of LPG tanker to Elgas with the proceeds to be applied to debt reduction.
In the next few months the company will also invest about $4 million of capital expenditure to reduce the Oil and Gas divisions average prime mover age to 3.2 years.
While McAleese is still hauling for Atlas Iron and has a new contract for their Mount Webber mine, similar to what's in place for the Abydos and Wodgina mines.
"McAleese Group's haulage contracts with Atlas are designed to maximise Atlas' cost competitiveness at low iron ore prices and provide the Company with an increased return when iron ore prices are higher," the December update said.
"This is achieved through a base haulage rate and profit share linked to Atlas' received AUD iron ore prices.
"At current AUD iron ore prices there is no profit share from Atlas' operations, placing material downward pressure on earnings from the Bulk Haulage division in recent months."
The businesses Heavy Haulage and Lifting division deteriorated over last financial year, but they remain confident maintenance capital expenditure in the resources sector would improve over the medium term, though they are unsure when it will turn around.
They also reported they banking syndicate which backs them were aware of the progress they had made and were supportive of the process.
McAleese is expected to provide a further update on its financial position next month when it releases its financial results.
McAleese financial woes
McAleese has been under financial stress for some time, share prices have dropped 96% since it first listed on the ASX in 2013.
The first bullet came when a Cootes tanker crashed in Sydney back in 2014, McAleese being Cootes' parent company.
The debacle lost them contracts and called the roadworthiness of the fleet into question.
The mining down turn was another blow with an announcement from Atlas Iron that they would progressively shut down mining operations in April last year.
McAleese reportedly generated half of its earnings from Atlas Iron carting contracts.
Then last June only months after they purchased a 50% stake in Jon Kelly's infamous Heavy Haulage Australia business the company took a financial hit with HHA went into receivership.
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