World News – AU – Sale of 50 Thiess coins up to $ 1 9b boosts CIMIC


Investors pushed CIMIC’s share price up 6% after the cash-strapped company announced it would get rid of half of Thiess for $ 1.7 billion to $ 1 9 billion

The sale will help cover cost explosions on projects and pay its suppliers after CIMIC was forced to abandon supply chain finance systems

However, S&P warned that this would reduce the scale and diversity of the company as Thiess – a global mining services company – is CIMIC’s largest profit and cash flow generator

Australia’s largest construction company has been in talks to sell its mining division since July with Elliott Advisers, the UK subsidiary of US hedge fund Elliott Management

The Spanish-controlled construction group has been trying to sell Thiess – its best-performing division in 2019 with a profit of $ 603 million – for about a year, but the deal has been delayed by the COVID-19 pandemic

It is expected to generate a pre-tax gain for CIMIC of about $ 2.2 billion and an after-tax gain of about $ 1.4 billion, subject to adjustments The CIMIC share price climbed to $ 22.20 on Monday

CIMIC told the market in October that its operating cash flow has weakened in the past 12 months, falling 21% to $ 922 million as of September 30, from $ 116 billion a year ago

With joint venture partner John Holland, CIMIC is battling Transurban over who will pay around $ 1 billion in additional costs on the conflict-ridden West Gate tunnel project in Melbourne

The group has also cut its use of controversial fundraising techniques by $ 705 million over the past nine months, amid the Oct. 31 deadline to stop abusing Greensill Capital’s facilities

The use of supply chain finance – also known as reverse factoring – allows companies like CIMIC to increase their cash flow by keeping the money they owe in payments in invoices The company had a supply chain financing balance of $ 146 million as of September 30

CIMIC unveiled its supply chain finance balance after announcing that its January-September net profit fell 17% to $ 4736 million, excluding comparison with $ 1 in 20,198 billion in write-downs of its operations in the Middle East

CIMIC had used Greensill Capital’s financing services to delay payment to its suppliers beyond the recommended 30 days But after criticism from regulators and scrutiny from the Australian Financial Review, Greensill ordered all Australian customers to stay within the 30 day limit or stop using its services by the end of the month

Regulators have slammed the company for paying suppliers late and CIMIC has been hit with a class action lawsuit alleging it used supply chain finance to mislead investors about the true nature of its cash flow

The company told the market on Monday that the sale would reduce CIMIC’s factoring balance by about $ 700 million and its lease obligation balance by about $ 500 million

US fund manager Elliott Advisors will jointly control Thiess with CIMIC in accordance with a shareholders ‘agreement with governance arrangements, including Thiess’ financial and dividend policies

The transaction includes options to transfer future shares, including a potential initial public offering or sale to a third party and an option for Elliott to resell its stake in Thiess to CIMIC between three and six years after completion

« The sale agreement reflects the continued strategic importance of Thiess as a core business of CIMIC, » said Marcelino Fernández Verdes, Executive Chairman of CIMIC Group

« He capitalizes on the strong outlook for the mining sector and, together with Elliott, we will pursue market opportunities in line with Thiess’ growth and diversification strategy »

Thiess is the world’s largest mining services provider, providing surface and underground mines in Australia, Asia, Africa and the Americas

Thiess provides services to 25 projects in a range of products It has a diverse fleet of factories and equipment of more than 2,200 assets, a team of around 14,000 employees and generates annual revenues of over $ 4 billion

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News from around the world – AU – Sale of 50 pieces of Thiess up to $ 1 9b stimulates CIMIC


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