The loan, repayable in December 2017, provides Emeco with more flexible terms and conditions than the previous syndicated debt facility and frees it from maintenance covenants until the facility is more than 50% drawn.
If that happens, Emeco must ensure it has an income cover ratio of 1.25 times and gearing of less than 65%.
Emeco chief financial officer Greg Hawkins said the financing agreement was better suited to work in conjunction with its existing $US335 million ($A411 million) bond issue.
“With a cash balance of approximately $A30 million in addition to this $75 million loan, the business continues to maintain a prudent level of liquidity and will continue to focus on strengthening the balance sheet,” Hawkins said.
In November the company announced renewed corporate strategy aimed at building on its core business and capitalising on its unique position as Australia’s only listed specialist mining rental business.
The company is aiming to keep fleet utilisation at above 70%, up from October 2013’s historic lows of 41%.
Emeco’s managing director Ken Lewsey told shareholders he was cautiously optimistic for the 2015-16 fiscal year, but believed utilisation in the mid-70% range was possible.
The company is also expanding its maintenance offerings, focusing on paying down debt over the next three years and looking at opportunities outside the mining sector to create a more resilient company capable of weathering downturns in the resources space.
Emeco generated profit before tax and costs of $71.1 million last financial year, down due to costs associated with its Canadian oil sands exposure of which it has 13 customers. Oil sands is now Emeco’s single most profitable commodity.
The company also took a $41 million pre-tax hit associated with the closure of its Indonesian business in order to focus on the core markets of Australia, Chile and Canada.
Emeco said Indonesia’s uncertain policy attitude to mining and the diminishing quality of its customer base determined its decision to shut up shop there.
New South Wales gold and coal contracts continue to perform strongly, while Western Australia and Queensland fleet utilisation dropped off as coal, iron ore and gold prices diminished. Some fleet has been moved from Queensland, but in Western Australia the firm has long-term contracts with a number of mid-tier producers, including its largest gold mine contract.
Iron ore accounts for less than 10% of the firm’s income.
