The fortunes of mining services group Bradken could be boosted if a reported recapitalisation plan goes ahead, an analyst says.
Shares in Bradken were on Thursday placed in a trading halt amid speculation about a potential recapitalisation plan to provide a much-needed cash injection for the troubled company.
CHAMP Private Equity is said to be behind the plan to help the company refinance more than $400 million worth of debt ahead of June 30.
The proposal is believed to be under consideration by Bradken's board, The Australian Financial Review reported on Thursday.
Bradken says it will make an announcement regarding the speculation before the share market opens on Monday.
CMC Markets chief market analyst Michael McCarthy said while details about the reported plan were unclear, it could be good news for the embattled engineering firm.
"An injection of realm of $50 or $60 million could be enough to get them through the current woes without causing too much grief for existing shareholders," Mr McCarthy said.
"The ideal result for the company would be an ... injection of funds that doesn't significantly dilute shareholders."
The refinancing talk comes after Bradken's chief executive Brian Hodges earlier this month announced his retirement after 18 years with the mining equipment and machinery maker.
In April, Bradken rejected a $428 million takeover offer from private equity firm Pacific Equity Partners.
That was after the company cut about 500 jobs in a major restructure in 2013/14, amid lower revenue from its mining products, mineral processing, rail and engineering divisions.
Bradken shares have slumped in recent times, dropping from $5.08 in August 2014 to $1.72 before Thursday's trading halt.
CMC's Mr McCarthy said the market had currently "passed judgment" on the company.
"There's real concerns particularly after the rejection of the takeover bid that there's no easy path out of the current situation for Bradken," he said.
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