Tuesday, February 10, 1998
American Eco, Dominion Bridge in 'exclusive' talks
By ROBERT GIBBENS
For The Financial Post
MONTREAL - The US$93-million takeover of embattled Dominion Bridge Corp. by Houston-based American Eco Corp. construction group inched forward yesterday.
The companies are "in exclusive negotiations" until 5 p.m. Thursday on American Eco's planned acquisition of Dominion with an offer of debentures convertible into American Eco shares and worth about US$3 per Dominion share.
American Eco must inject US$5 million cash into Dominion by Thursday by buying Dominion shares and provide a US$25-million loan once a definitive agreement is reached.
The US$5 million is already in escrow, say sources close to the talks, and a definitive agreement could be signed within two weeks.
Michael McGinnis, American Eco chairman, will take over as Dominion's chairman and chief executive from Michel MarengŠre if the preliminary agreement is signed Thursday, bringing in a new vice-president of finance. He will start by rebuilding relations with customers, suppliers and employees.
But the future of MarengŠre, chief operating officer Nicolas Matossian and other senior Dominion managers remains unclear.
Dominion shares (DBCO/NASDAQ) fell 1/16 yesterday to US$13 1/32, while American Eco shares (ECX/TSE, ECGOF/NASDAQ) dipped 50› in Toronto to $16.50, and 7/32 in New York to US$11 7/32.
Matossian would not comment on reports that, with three boardroom resignations in the past week, the independent directors are in control and have retained their own lawyers.
A US$16-million financing proposed with Sweden's Sanda Investment Group remains on ice pending the outcome of the talks.
Analysts said if American Eco succeeds, it would take 60 to 90 days for the detailed offer to go out to shareholders, and another 35 days before a special meeting could approve the deal. A 90% vote would be sought.
American Eco's full 1997 results are expected in a few days. Nine-month net income was US$12.5 million (US83› a share) on revenue of US$150 million, compared with US$6.3 million (US61›) on revenue of US$90.5 million a year earlier.
American Eco is a construction, engineering and fabrication company and is building heavy components for the Sable Island natural gas project at a Halifax subsidiary.
"Our revenue is now running at a US$300 million annual rate or about the same as Dominion without its Australian engineering unit," said John Pennie, vice-chairman, in Toronto. "We're interested in all Dominion's businesses and we're confident the talks will succeed."
In Jackson, Miss., a spokesman at Roxco Ltd., a U.S. construction company that tabled a bid for Dominion two weeks ago, said: "We're moving on and wish them both well. But they face challenging problems and American Eco may have a tiger by the tail."
There is a dramatic global shortage of offshore drilling rigs, he added. "We were interested in Dominion mainly because of its Davie shipbuilding unit in Quebec City." |
