Engineering consulting and services firm LogiCamms (ASX:LCM) plummeted from a $1 million 2017 half-year profit to a $8.6 million loss in the six months to December 31, but says a merger with a private New Zealand engineering business will pull them back out.

LogiCamms provides multidiscipline engineering consulting across multiple industries but primarily in minerals and metals, hydrocarbons and infrastructure.

It is currently conducting due diligence on OSD, a privately-owned engineering consulting company with Trans-Tasman operations, after OSD approached LogiCamms with a merger proposal during the reporting period.

The non-cash proposal would see LogiCamms issuing new shares to existing OSD shareholders as consideration for the acquisition of all of the shares in OSD; but OSD would take a controlling 59 per cent stake of the new merged company.

LogiCamms reported an $8.6m loss for the 2019 half-year, as a result of a goodwill impairment of $8m — that figure being the difference between OSD’s implied value of LogiCamms and LogiCamms’ internal view of its current assets and market perception.

“The directors resolved to write down the value of goodwill by $8m after considering a number of factors including the group’s recent financial performance, market capitalisation relative to net assets and the implied value of the proposed merger. The goodwill write-down brings the group’s net asset value to a level approximating its market value,” the company said in a statement to the ASX.

The company says it will seek shareholder approval for the merger in May, pending due diligence, with the transaction to be completed “shortly after”. It would continue to trade on the ASX under the name LogiCamms.

“The merger would create a strong ASX-listed mid-tier engineering, project delivery, technology, asset services and training group with approximately 550 employees and specialist offerings across a range of industries and locations in Australia, New Zealand and the Pacific,” it said.

The combined business would have 2019 full-year revenue of $130 million, LogiCamms claims. The current company banked $41 million in revenue for the 2019 half-year.

LogiCamms (ASX:LCM) shares rose 3 per cent to 15c today.