Boart Longyear, a drilling company controlled by a Macquarie Bank-led group, plans to raise as much as 2.65 billion Australian dollars, or $2.1 billion, in Australia’s largest initial share sale in nine years.

It is offering shares between 1.76 dollars and 2.10 dollars each, the Sydney company said Thursday. The sale will be completed April 3, with proceeds going to owners and to pay off debt.

Boart Longyear, sold by Anglo American to buyout firms for $545 million in 2005, plans to add to the six acquisitions it made in the past seven months to expand in a drilling market worth $10 billion. The sale will test investors after mining companies yesterday led the biggest slump in the Australian benchmark stock index since the 2001 terrorist attacks in the United States.

“Mining services stocks have done well over the last few years,” said Jamie Nicol, chief investment officer at Dalton Nicol Reid. “But I expect that some of the demand for it might be a little softer than might otherwise be expected” after Wednesday’s fall and the decline in shares of similar initial sales, he said.

Boart was sold in 2005 to Advent International, Bain Capital and senior management, who together own 40 percent of the company. A group led by Macquarie took a 60 percent stake in 2006, Boart said. The group paid over $1 billion in cash, and assumed debt of $502 million, according to Bloomberg data.

After the share sale, Macquarie and the investors it lead will own a total of 12 percent of the company, with management owning 3.6 percent, according to the company. Advent and Bain will sell their stakes.

Boart provides drilling services to customers including BHP Billiton and Rio Tinto Group, the world’s largest and third-largest miners, and has 17 percent of the market share in mineral drilling services as the market leader, the company said.

Boart Longyear could have a market value of between 2.61 billion dollars and 3.12 billion dollars, the statement said. The offer values the company at between 13.3 times to 15.8 times forecast earnings. The estimated price-earnings ratios of its rivals are 16.9 times for Major Drilling Group International, 22.3 times for Layne Christensen, and 8.74 times for Ensign Energy Services.

source news : iht.com