Macmahon off to fresh start with $42M

MACMAHON Holdings has pocketed $42 million from its proposed $80.7 million capital raising as it seeks to rebuild its books. However, the news didn’t stop its shares from slumping by more than 20%.
Macmahon off to fresh start with $42M Macmahon off to fresh start with $42M Macmahon off to fresh start with $42M Macmahon off to fresh start with $42M Macmahon off to fresh start with $42M

 

Lauren Barrett

Macmahon announced on Wednesday it was tapping the market for $80.7 million to strengthen its balance sheet following recent construction write-downs and to fund the future growth of the mining business.

In a statement to the market today, Macmahon said it had successfully completed the institutional component of the raising after the offer received strong interest from Macmahon’s existing institutional shareholders, who took up 86% of the new shares available to them.

Importantly, contractor Leighton Holdings, the company’s largest shareholder, showed strong support for the offer by subscribing for its full entitlement under the institutional offer and participated in the institutional shortfall book build.

Following completion of the deal, Leighton is expected to hold a 19.5% stake in Macmahon.

Macmahon chief executive Ross Carroll said the placement would put it in a good position to build a strong future in the mining business.

“The successful completion of the institutional component of the offer demonstrates strong shareholder support for Macmahon’s refocused strategy to build on the long-term success of our mining business,” he said.

“Macmahon looks forward to its mining-focused future, with a strengthened balance sheet and supportive shareholder base.”

The retail part of the offer is expected to raise $38 million and will close in mid-January.

The funding injection is the boost the company needs following a difficult past couple of months.

The company’s construction division has weighed it down, with Macmahon revealing a cost blowout on Rio Tinto’s Hope Downs 4 rail project in September.

The announcement coincided with long-serving Macmahon CEO Nick Bowen announcing his resignation, while the company also informed the market it had lowered its full-year profit after tax to between $20-40 million.

For FY12, Macmahon achieved a record profit of $56.1 million.

The company is attempting to put its troubles behind it by selling off its construction arm to Leighton.

The companies have inked a memorandum of understanding to enable Leighton to acquire select Macmahon construction projects in a deal worth just over $16 million.

The move will enable Macmahon to become a dedicated full service mining contractor, with the company’s mining business expected to deliver about $1.2 billion in revenue for FY2013.

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