Macmahon Holdings has called out CIMIC Group for what it says is a low-ball takeover bid, saying the Spanish-controlled company should be aware of the improving market for mining services.
Macmahon Holdings has called out CIMIC Group for what it says is a low-ball takeover bid, saying the Spanish-controlled company should be aware of the improving market for mining services.
Macmahon told shareholders today that Cimic’s offer was inadequate and neither fair nor reasonable, after an independent expert valued the business at between 17.7 cents and 20.3 cents a share.
“Given that Cimic’s offer is a 18.1 per cent to 28.6 per cent discount to that valuation, the independent expert has concluded that the offer is neither fair nor reasonable,” Macmahon said.
“The offer has been made after a challenging period in the resources cycle.
“The directors are of the opinion that the offer does not adequately reflect the improving market for commodities and the mining services sector.
“As a participant in that sector, Cimic should be well aware of the improving market.”
Macmahon also announced it had grown half-year revenue by 7.4 per cent to $168.3 million, but made a loss of $23.3 million, down from a $3.3 million profit in the six months to December 2015.
Its profit from continuing operations was also in the red, down from $14.3 million profit in the December half-year to a $5 million loss.
No dividends were declared.
Macmahon also reiterated previous comments on Cimic’s 14.5 cents per share takeover bid for the business, saying shareholders should take no action until Macmahon releases a target’s statement which will “be issued shortly”.
Macmahon chief executive Michael Finnegan said the company had now largely resolved its outstanding legacy project issues and was anticipating a “significant” turnaround in financial performance over the next 18 months.
“Over the past several months, we have been steadily implementing a number of initiatives to lay the foundations for future success, including cost reductions, measures to turnaround performance at Telfer and the termination of operations in Nigeria,” Mr Finnegan said.
“In regards to our existing order book, Macmahon's revenue from the Tropicana project is expected to increase by approximately 25 per cent in the 2017 calendar year, and may increase further from July 2018 if Tropicana's Long Island expansion proceeds.
“Macmahon's second largest contract, the Telfer project, is expected to start generating monthly profits for Macmahon during the latter part of the 2017 calendar year following the implementation of a number of turnaround initiatives. This is anticipated to make a significant impact on our overall financial performance.”
Mr Finnegan said the company was pursuing about $6.4 billion of potential new contracts, a number of which Macmahon has been shortlisted for.
These opportunities reflect the improving market for commodities and the mining services sector more generally and I am confident that we will be successful in securing some of this work in the near future,” he said.
Macmahon hopes to breakeven its EBIT for FY17, but grow it to $35 million by the end of FY18.
Macmahon shares were unchanged at 15 cents each at 10:45am.
