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OTOC Limited Increases Stake In Kitchen Facilty At Fortescue Metals Mine

OTOC Limited (ASX: OTC) has expanded its Facilities Division with acquisition of the remaining 50% of a 700 person commercial kitchen/diner facility in the Pilbara, Western Australia, for $2 million.

Chief financial officer Brian Mangano told Proactive Investors that the kitchen's EBITDA contribution is forecast at $1.5 million for the financial year ending 30 June 2014.

This is double its previous contribution and brings the total EBITDA forecast for the Facilities Division up to $1.7 million.

The acquisition is consistent with the company's strategy of growing its Facilities Division and associated recurring revenue base.

"This transaction enhances OTOC's rental income base and assists in building out the Facilities Division," chief executive officer Adam Lamond said.

"The kitchen is an important part of FMG's operations at Camp 25 and as such provides a long term income stream for OTOC."

The facility is situated at a Fortescue Metals Group (ASX: FMG) accommodation facility in the Pilbara.

Mangano added the company plans to further expand its Facilities Division.

Analysis

With the commercial kitchen/diner facility already contributing the majority of EBITDA from OTOC's Facilities Division, the acquisition of the remaining 50% in the facility has likewise increased its contribution to the company's long-term earnings.

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