Looking to make its foray into the US market, transport operator Kelsian Group (ASX: KLS) has announced it will acquire bus company All Aboard America! Holdings Inc. (AAAHI) in a deal worth USD$325 million (AUD$487 million).
To fund the buyout, Adelaide-based Kelsian Group - formerly known as SeaLink - has launched a $281 million equity raise, a $3 million vendor conditional share issue and will draw down $226 million of debt. The agreement will also see KLS assume liabilities worth $USD26 million (AUD$39.3 million).
The raise has been split into a $135 million placement and a separate one-for-8.5 rights issue worth $143 million. New shares will be issued at $5.55 each, representing a 12.6 per cent discount to the last closing price of $6.35 on 13 March.
Collectively holding 21.8 per cent of KLS shares on issue at the time of the announcement, Kelsian CEO Clint Feuerherdt and all company directors with a shareholding intend to fully or partially take up their rights under the entitlement offer.
“We are thrilled to bring AAAHI into Kelsian’s global platform. AAAHI has an excellent reputation and a track record of delivering high-quality contract and charter services,” Feuerherdt said.
“The combination of Kelsian’s expertise, and AAAHI’s reputation and scale, provides a solid foundation for our entry into the USA market, where we anticipate strong macro tailwinds.”
Founded in 2012, AAAHI is the fourth largest motorcoach operator in the US and provides passenger motorcoach services to corporate, government, education, Liquefied Natural Gas, and tourism customers.
The business has a footprint in the US states of California, Arizona, New Mexico, Texas, Louisiana and Colorado and services more than 2,000 customers with a fleet of 1,063 vehicles.
Last calendar year saw AAAHI generate US$208 million (AUD$300 million) in revenue and pro forma normalised EBITDA of US$51 million (AUD$74 million), representing an approximately 25 per cent EBITDA margin.
The vast majority of revenue came from corporate customers (USD $101 million), followed by government contracts (USD $48 million), the education sector (USD $36 million) and other customised services (USD $20 million).
Under the agreement with Kelsian Group, certain AAAHI business founders and senior management have elected to partially reinvest $3 million in aggregate of their acquisition proceeds in a subscription for KLS shares.
“AAAHI has achieved significant growth over the last decade, including multiple successful acquisitions, and we are incredibly excited to continue that trajectory with Kelsian’s support and capabilities,” AAAHI CEO Bill Trimarco said.
“We see strong cultural alignment between the two businesses and hope to leverage shared operational expertise to optimise performance and drive on-going growth.
“We were very impressed by the Kelsian business and think that Kelsian USA will be a great place for our employees to call home.”
The deal with AAAHI comes almost six months after Kelsian Group acquired 37-year-old Perth bus and coach company Horizons West for an enterprise value of $23.4 million.
The acquisition remains subject to customary conditions, including customary regulatory approval from the United States Surface Transportation Board (STB).
It is expected to be completed prior to 30 June 2023.
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