Sale of the stake is expected to strengthen the balance sheet of the Australian multinational contractor
CIMIC Group has agreed to sell a 50% stake in its fully-owned mining services subsidiary Thiess to funds advised by Elliott Advisors (UK) for AUD2.15bn ($1.52bn).
Thiess provides open cut and underground mining services across Australia, Asia, the Americas, and Africa.
The company offers services to 25 projects across a variety of commodities that include metallurgical and thermal coal, iron ore, copper, nickel, gold, diamonds, and oil sands.
The mining services provider has a workforce of nearly 14,000 employees and has annual revenues of more than AUD4.1bn ($2.9bn).
CIMIC Group executive chairman Marcelino Fernández Verdes said: “The sale agreement reflects Thiess’ ongoing strategic importance as a core activity for CIMIC.
“It capitalises on the robust outlook for the mining sector and, together with Elliott, we will pursue market opportunities in line with Thiess’ growth and diversification strategy.”
Currently, Thiess is a part of CIMIC’s mining and mineral processing segment. The deal with Elliott Advisors (UK) does not include Sedgman, which is also part of this segment.
Sedgman caters to the global resources industry with minerals processing and associated infrastructure solutions.
CIMIC said that the deal is expected to consolidate its balance sheet, giving it cash proceeds of AUD1.7bn ($1.2bn) to AUD1.9bn ($1.34bn). Besides, it will cut down the Australian contractor’s factoring balance by nearly AUD700m ($496.5m) and lease liability balance by about AUD500m ($354.6m).
Elliott Advisors (UK) is an affiliate of Elliott Management, an activist hedge fund, which manages over $40bn in assets across the world.
CIMIC has option to reacquire divested stake in Thiess in future
The deal includes customary future share transfer options. It includes a possible initial public offering or sale to a third party, and also provides scope for Elliott Advisors (UK) to divest its stake in Thiess to CIMIC, three to six years after the closing of the transaction.
CIMIC stated: “Exercise of Elliott’s option would enable CIMIC to potentially repurchase the interest now being acquired by Elliott at the lower of today’s sale price or fair market value at that point in time, and benefits from a guarantee from CIMIC’s majority shareholder HOCHTIEF.”
Completion of the deal is subject to financing and relevant regulatory approvals, and meeting of other customary conditions.