Boart Longyear Raises A$2.36 Billion in Initial Sale

(Corrects date shares will start trading in 10th paragraph in story moved April 3.)

Boart Longyear (BLY) Ltd., a provider of drilling services to mining companies including BHP Billiton Ltd. (BHP), raised about A$2.36 billion ($1.9 billion) in Australia's biggest initial public offering for nine years.

Boart's shares were priced at A$1.85 each, Jim Kelly, a company spokesman said by phone. The Sydney-based company offered them at between A$1.76 and A$2.10. About 1.273 billion shares were sold, two people with knowledge of the offer said.

BHP, the world's largest mining company, and its rivals may spend more this year on exploration than last year's record $7.13 billion as Chinese demand depletes existing mines, Metals Economics Group said in March. Boart wants to expand in a drilling market it says is worth $10 billion a year.

The sale ``looked like reasonable value because demand and fundamentals look to be in their favor in the next two to three years at least,'' said Dean Fergie, who helps manage A$330 million at Opis Capital in Melbourne, and participated in the share sale.

A group led by Macquarie Bank Ltd. that bought a 60 percent stake in 2006 will retain about 12 percent of the company, with management owning 3.6 percent, according to a presentation made before the offering was priced.

Shares in Macquarie, Australia's biggest investment bank, rose A$1.37, or 1.7 percent, to A$82.27 on the Australian Stock Exchange at 3:33 p.m. Sydney time

Market Value

About 25 percent of stock on offer was sold to individuals, with institutional investors accounting for the rest, according to the people, who declined to be named as details aren't public. Stock was sold to U.S., European and local investors, they said.

The sale values the company at A$2.75 billion, the people said. Stephen Yan, a Sydney-based spokesman for Macquarie, declined to comment.

It was the largest initial share sale in Australian since the government sold a third stake in Telstra Corp. for A$14.3 billion in 1997.

Macquarie, Goldman Sachs JBWere Pty. and UBS AG (UBSN) are the joint managers for the sale. The stock will start trading on the Australian Stock Exchange April 5.

Boart provides drilling services to BHP and Rio Tinto Group, the third-largest mining company, and has 17 percent market share in mineral drilling services, the company said. Its operational base is in Salt Lake City, Utah.

Profit Forecast

Minerals industry businesses are forecast to account for 69 percent of 2007 sales for its drilling unit, and it has operations in the U.S., Australia, Africa and Canada.

Boart is forecasting pro forma net profit of $149 million on sales of $1.46 billion.

The company was sold by Anglo American Plc for $545 million in 2005 to Advent International Corp., Bain Capital LLC and senior management, who owned 40 percent before the initial offering. The Macquarie-led group paid more than $1 billion in cash, and assumed debt of $502 million, according to Bloomberg data.

Anglo said Boart had operating profit of $67 million in 2004. Earnings before interest, taxes and depreciation were $200 million in 2005, $278 million last year and will rise to $320 million for the year ending Dec. 31, according to the prospectus.

To contact the reporter on this story: Tan Hwee Ann in Melbourne at hatan@bloomberg.net; Joyce Moullakis in Sydney at jmoullakis2@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@Bloomberg.net.

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