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Mining Monthly
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01 May 07
With it’s shares debuting on the Australian Securities Exchange at a 33% premium to the $1.50 asking price, The MAC is looking west.
On April 12, The MAC Services Group debuted on the ASX, with an opening share price of $2. The company had been looking to raise up to $73.5 million through the offer of up to 49 million shares at an issue price of a $1.50 a share.
With the float locked away, the Queensland - based mine site accommodation provider - it claims to be the largest single accommodation provider in the Central Bown Basin- can retire debt and look to expand it’s offering further in the Bowen Basin and also into Western Australia. The company takes a different approach to most other mine site accommodation players in that it can provide a full service, from buying the land through building, managing and maintaining the accommodation and providing full catering services.
The MAC executive chairman Kevin Maloney said the company had employed one-time Spotless Services Queensland client services manager and WA operations manager Andrew Tate to set up the company’s WA operation.
Indeed, Maloney himself has had the prior experience in the west. He was with Elders Resources back in the 1980’s – including as chief executive of Elders Resource Finance – when it was involved with a number of resources plays over here.
With its float successfully completed, The MAC is resting on a war chest of potentially up to $100 million to fund its expansion efforts. Maloney said the funds from the float would allow it to fully claw back the money owing on its $80 million banking facility. “Our banks have agreed to top that banking facility up to $100 million,” he said.
Maloney founded The MAC, which stands for The Marley Accommodation Centres, named for Marley Holdings which controls the Maloney family’s interest in the company, about 11 years ago. Back then it was involved with providing accommodation for the construction camps. Life was much simpler back then. Dongas were the name of the game. These days resort living is the industry’s demand.
Maloney said due to the pressure to get projects completed, The MAC had upgraded its Moranbah facility from 250 rooms to 1200 rooms in two facilities. “Plus we did complete upgrade of the facilities from bunkhouse style to 100% motel – style rooms,” he said. “We’ve gone from camp – style complexes to villages. We take on this whole concept of better accommodation. We were the first to put in fridges and TV’s and separate air conditioners and en suites. Now we’ve gone to resort style rooms in Queensland. We’re treating people more like quests than mining contractors.”
However, while it was probably one of the first to head down to the resort – style accommodation in mining accommodation, The MAC is not on its own in this regard. What does set The MAC apart from other mine site accommodation players is that it will take full control of a village, right from the purchase of the land, through the construction of the buildings and the running of the accommodation village. It will even handle the council approvals. In some cases, the company will even speculate on how mining projects will pan out and lay the groundwork for the accommodation facilities for them.
“That’s what we did with our Coppabella project,” Maloney said. “We went in and acquired the land and got all the council approvals. The mining companies saw what we’d done and rather than doing it themselves they came to us.
“A lot of companies like it because they are not sure what size their project is going to be. We can start them off with a 100 - man village and have the ability to build it up”. Having these liabilities has enabled The MAC to grow into a multi-disciplinary organisation. Its capabilities include maintenance, a linen service, construction and catering. It has more than 350 staff.
The MAC currently has four accommodation villages in the Bowen Basin. These are situated at Nebo, Dysart, Moranbah and Coppabella. According to The MAC’s prospectus, these villages are forecast to provide 1.2 million available room nights from the more 3,300 rooms it has there in the 2007-08 financial year.
Maloney said the company’s expansion into the maintenance and linen services had even helped add to its bottom line. “Maintenance is a big thing in these accommodation centres,” he explained. “We had to do our own maintenance service and then we found that everyone else in the town sites were using it.”
It seems The MAC’s approach to the mine site accommodation game is also meeting favour with some of the big financial backers. Maloney said the Lowy, Smorgan and Packer families had all put money into the company. “They all love the model,” he said.
Maloney said after leaving Elders in the early 1990’s he had gone into quarrying with Readymix before an opportunity arose to become a silent partner in a construction camp building business.
“The first venture didn’t go well so I had to learn about the business and make up the losses of $600,000 from that first effort,” he said. “Then I got asked by some big clients to look at some permanent village concepts.”
That led to the beginning of what is now The MAC and also the end of its involvement in the construction camp game. “We’re not in the construction camp business,” Maloney explained, “I think the Auscos and Fleetwoods do it better.”