McConnell Dowell Corporation, the Australian listed construction company
currently 63% owned by Aveng, has proposed a scheme of arrangement that will
result in Aveng moving to 100% ownership of the company.
The scheme, which has been initiated by the McConnell Dowell independent
directors, is in the form of a scheme of arrangement whereby Aveng will
acquire the remaining 37% of the shares for a consideration of A$1.54 per
share. Executive option holders will receive A$0.20 per option, being the
difference between $1.54 and the option strike price. The payment will be
in cash and is subject to the usual regulatory and foreign exchange
approvals. This will result in Aveng acquiring a further 15.7 million
McConnell Dowell shares and 1.4 million options for a total consideration of
A$24.5 million (SAR120 million).
In the statement accompanying its December 2002 results, McConnell Dowell
noted that it had elected not to pay an interim dividend and advised that it
was facing difficulty in obtaining the necessary insurance, bonding and bank
finance to enable it to operate effectively in the changing construction
environment. Turnkey-type contracts are generally larger, requiring more
bonding capacity, and access to a larger balance sheet. As a result,
McConnell Dowell was becoming increasingly more reliant on the strength of
the Aveng balance sheet in order to win international contracts. In
addition, during December 2002, Aveng advanced McConnell Dowell an amount of
A$20 million to augment its working capital requirements.
Aveng chief executive, Carl Grim, said McConnell Dowell was a great company
that had unfortunately been caught up in the changing dynamics of the
international construction industry.
"We have worked well with the McConnell Dowell team and have got to know
each other well over the last few years. We have carried out some exciting
projects together, the Sasol pipeline through Mozambique being a recent
example. Our vision has always been to grow our construction business in
the developing world and owning 100% of McConnell Dowell with its well
established presence in South East Asia is integral to that vision. The
company has been constrained by its size in the past and we believe that by
becoming a wholly owned subsidiary of the Aveng group, it will be able to
integrate its unique capabilities with those of Grinaker-LTA, providing
Aveng with a vehicle for growth in that region."
Ends
Enquiries
Aveng
Carl Grim Chief Executive Officer 011
779 2801
TriLogy Communications
Douglas Taylor 011 726 1841
082
455 3577
Aveng is a South African based group, listed on the JSE Securities Exchange
in the Basic Industries - Construction and Building Materials sector. The
company aims to become a globally competitive construction-related group,
focused principally on the developing world.
Its major businesses are
* Construction
* Steel and Allied
* Cement (46% investment in Alpha Limited)
Aveng's objectives are
* To earn a return on average equity of 20%
* To grow diluted headline earnings per share by 20%
* To generate 50% of group revenues in hard currencies
* To have a debt:equity ratio of 35%
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