CIMIC Group has closed 2020 by completing the sale of a 50 per cent interest in Thiess to Elliott Advisors, with chairman Juan Santamaria saying the deal does not downplay the mining services company’s importance to the business.
“Our retention of the remaining 50 per cent reflects the ongoing strategic importance of Thiess to our business,” he said in an ASX announcement.
CIMIC’s 50 per cent interest in Thiess is valued at around $4.3 billion and generated around $2.2 billion in cash for CIMIC, up from $1.9 billion that was initially estimated.
The final figure accounts for the latest financial position of Thiess.
Santamaria said the sale of 50 per cent of Thiess enabled CIMIC to capitalise on the sector outlook and Thiess’ strong performance.
“The transaction proceeds will primarily be used to strengthen our balance sheet through the reduction of debt, while also providing additional capital to pursue organic growth prospects as well as broader capital allocation opportunities,” he said.
The CIMIC board also approved a market share buy-back of its company shares last month.
“The new buy-back will continue to meet CIMIC’s previously stated aims of enhancing shareholder returns and capital efficiency, and maintaining balance sheet flexibility to pursue future growth and investment opportunities,” CIMIC stated in December.
CIMIC generated a revenue of $6.2 billion in the first half of 2020, a reduction of $800 million from the prior corresponding period.
The company stated that there was a temporary delay in the award of new projects and slowdown of revenues across its domestic and overseas activities due to the COVID-19 pandemic.
“The outlook across our core businesses remains positive, notwithstanding the impact from COVID-19…” CIMIC Group then-chairman Marcelino Fernández said in July.
“The mining market is proving resilient and we have signed an exclusivity agreement with funds advised by Elliott Advisors (UK) Limited to support our mining growth strategy.”