The NRW Holdings Limited (ASX: NWH) share price was down 4.98% at the time of writing to $2.00 following a trading halt put in place yesterday. The share price fall came after the company announced the outcome of legal proceedings related to Gascoyne Resources.
What was in the announcement?
Attempts by Habrock to place Gascoyne Resources into liquidation failed in the Federal Court. Gascoyne is currently under voluntary administration and NRW Holdings is involved in the recapitalisation of the company. NRW was a creditor to Gascoyne before it entered administration and had previously made impairments for trading debts owed for work performed. However, through an agreement with Gascoyne and its administrators, NRW has claimed that it can potentially recover 100% of its losses.
Gascoyne Resources owes NRW $32.7 million.
According to an announcement by NRW on 25 June 2020, NRW will receive an up front payment equivalent to 8.75% of an equity raising conducted by Gascoyne, to a maximum of $7 million. The total amount of the equity raising will be $80-$90 million. However, NRW has also previously stated that it may participate in a debt for equity swap with Gascoyne which will see it receive shares in the company rather than cash. NRW may also take payment in the future as a proportion of Gascoyne’s production, which will be determined by ounces produced and the gold price.
NRW has continued working with Gascoyne on its Dalgaranga project over the past 12 months.
About the NRW Holdings share price
NRW Holdings is a contractor that provides services to the mining and infrastructure sectors. It has been listed on the ASX since 2007.
In the year to 30 June 2020, NRW Holdings had record revenue of $2.062 million, an increase of 83% on the prior corresponding period. Earnings before interest, tax, depreciation and amortisation (EBITDA) in the year to 30 June 2020 were $250 million, an increase of 74% compared to the 2019 financial year. NRW had cash at 30 June 2020 of $170.2 million, an increase of $105.2 million.
The NRW Holdings share price has increased 101% since its 52-week low of $1.00. However, it is down 34.52% since the beginning of the year. The NRW Holdings share price is down 13.36% since this time last year.
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Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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