The share price of engineering group Murray & Roberts (M&R) surged more than 30% in early trade on Tuesday after the company announced that it will sell the entire stake in its Australian subsidiary Clough to Italian industrial group Webuild.
In a statement, M&R said it has been reviewing a number of strategic options to address Clough’s working capital needs, which have become increasingly urgent.
“Having reviewed all available alternatives and based on the above background, the board of directors of Murray & Roberts concluded that a transaction with Webuild was the preferred course of action,” reads the statement.
M&R said in terms of the sale and purchase agreement it signed with Webuild, the financial benefit is about R4-billion, which will be achieved “through the cancellation of an outstanding intercompany loan account between Murray & Roberts, the group’s Australian holding company and Clough, and a cash payment of A$500 000 (R5.7-million) to Murray & Roberts by Webuild.”
“Following the implementation of the proposed transaction, Murray & Roberts will have no residual exposure to Clough. The group’s interests in Australia will, however, continue through RUC Cementation Mining, one of the three operating companies in the group’s multinational mining platform,” said the company.
The Milan-based Webuild said due diligence has already commenced which will address standard legal, accounting, tax and operational matters, and will review the economic and financial forecasts made available to Webuild pending the negotiation of the transaction.
“At June 30 2022, Clough had an order backlog of approximately €2.1-billion (R37-billion), and approximately €2.7-billion worth of projects for which it is the preferred bidder,” said Webuild.
“Both the backlog and preferred bids are mainly concentrated in Australia and North America. Revenues for the 2022 financial year are approximately €1-billion. In addition, the company ended 2022 with a balance sheet free of financial debt.
“Webuild will support Clough’s financial reorganisation with the aim of turning it into the group’s platform in Australia, a strategic market with strong growth potential as infrastructure investments are expected to reach more than €300-billion in the 2022-2025 period. In Australia, Webuild’s order book and preferred bids total nearly €9-billion.”
For more business news from Sunday World, click here.
Follow @SundayWorldZA on Twitter and @sundayworldza on Instagram, or like our Facebook Page, Sunday World, by clicking here for the latest breaking news in South Africa. To Subscribe to Sunday World, click here
