Monday, 19 October 2020 11:13

CIMIC inks deal to sell equity share in Thiess

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Australian-listed engineering-led construction and mining services group CIMIC has entered into a sale agreement with UK funds manager Elliott Advisors under which Elliott will acquire a 50% equity interest in mining services provider Thiess, with CIMIC retaining the other 50% equity interest.

Thiess is included in CIMIC’s Mining and Mineral Processing segment with CIMIC company Sedgman, a provider of minerals processing and associated infrastructure solutions to the global resources industry. CIMIC will retain 100% of Sedgman, generating A$400 million of annualised revenues with normalised profit before tax margins of around 10%.

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.”

Under the deal, CIMIC and Elliott will jointly control Thiess in accordance with a shareholders’ agreement which contains governance arrangements as well as Thiess’ financial and dividend policies.

CIMIC lists other highlights of the deal as:

  • The transaction includes customary future share transfer options including a potential initial public offering or sale to a third party, and an option for Elliott to sell its interest in Thiess to CIMIC between three and six years from completion
  • 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 under the agreement is subject to customary conditions, including financing and relevant regulatory approval
  • The price for Elliott’s 50% equity interest in Thiess implies an enterprise valuation of approximately A$4.3 billion (based on 100% of Thiess), subject to certain adjustments
  • The transaction will strengthen CIMIC’s balance sheet by generating cash proceeds on completion of A$1.7 to A$1.9 billion as well as reducing CIMIC’s factoring balance by approximately A$700 million and CIMIC’s lease liability balance by approximately A$500 million
  • The transaction is expected to generate a pre-tax gain for CIMIC of around A$2.2 billion, and a post-tax gain of around A$1.4 billion, subject to certain adjustments
  • CIMIC will retain a strategic interest in its core mining operations while maintaining a balanced and diversified business portfolio

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