Glencore, which has an existing relationship with HWE at its Jamaican alumina operations, said it would commit $100 million to the contractor's recapitalisation plan, investing $60 million via a convertible preference share placement and underwriting a $40 million rights issue at 40c a share.

The new capital would be used to discharge the company's syndicated loan facility, other maturing financial obligations and fund working capital requirements. The company has more than $1 billion work-at-hand, requiring strong equipment investment.

"These funds will enable us to fully repay our syndicated debt facility and return the company to a sound financial footing," chairman Neville Walker said.

"In addition, our funds will allow us to continue the sizable capex program we require to meet our contractual obligations and optimise our returns, as well as to retain the flexibility to compete for new work in their buoyant resources market."

It has been an unsettled few months for the mining and engineering contractor, with its shareprice climbing as high as $1.15c and plunging to 41c in three months. It announced a profit downgrade linked to underperforming contracts, believed to include the Brisbane Port project, and the company is running under an interim management team after losing chief executive Bruce James in October.

Rumours of a takeover have also been circulating, but that seems to have lost some heat, with rivals Leighton Holdings and Downer EDI showing little interest in a bid.

The company has spent the past few weeks in discussion with banks to secure alternative funding arrangements, but the institutions were understandably insecure, Walker said.

"There has been some public speculation over the financial health of the company particularly focusing on whether the banks will continue to provide debt facilities to us," he said. "We began considering how best to secure those arrangements in a timely manner, which included the search for a strategic investor."

Walker said the company was still expecting a break-even result at best for the current financial year, and had incurred about $6 million of charges from bank negotiations and extensions. It delivered a pre-tax profit of $11.2 million for fiscal 2004.

Shareholders will vote on the proposed plan in February. HWE has also extended its existing finance facilities to early February 2005.

Trading in the stock was halted on December 19 when the price was 43c.