Engineering and construction contractor Clough Ltd has told shareholders the company has dealt with its problem contracts and can look forward to profitable trading in future.
Engineering and construction contractor Clough Ltd has told shareholders the company has dealt with its problem contracts and can look forward to profitable trading in future.
“With the provisions taken and the refinancing, we can now concentrate on the future and return Clough to being a great company again,” chairman Mike Harding told shareholders at the company’s annual general meeting last week.
Clough is in the midst of a refinancing that involves a $40 million rights issue fully underwritten by its major shareholder, South African company Murray & Roberts.
M&R originally invested in Clough just more than three years ago, and since then has poured in nearly $200 million to help the Perth firm deal with a handful of very expensive, problem contracts in the oil and gas sector.
It has also provided loan guarantees and a short-term loan facility.
M&R is likely to own more than 60 per cent of Clough following the rights issue, depending on the take-up by other shareholders, and could own as much as 67 per cent of Clough after conversion of notes.
Chief financial officer Andrew Walsh said Clough’s dispute with Origin Energy over the BassGas project in Victoria was now settled, and that while its dispute over the G1 project in India continued, it had been financially “ring fenced”.
‘‘We must now put the past behind us and shape the future for Clough,” Mr Harding told shareholders.
Former chief executive John Cooper, who will continue as a non-executive director, will be responsible for resolving the G1 dispute.
That will allow new chief executive John Smith, who has recently moved from Europe, to focus on the company’s future growth, which will primarily be in the oil and gas sector.
Mr Smith said Clough aimed to focus on its transition into an upstream oil and gas industry engineering, procurement and construction contractor, from the wellhead to the refinery gate.
“The resources sector, and in particular, the oil and gas industry globally is experiencing record levels of activity and the fundamentals are such that there are no signs of this abating in the near to medium term,” he said.
“If we focus on project management and engineering, we’ll be successful.
“We’re trying to develop some technology with the idea of moving Clough up the food chain.”
He said Clough was seeking to secure contracts for major oil and gas projects including Inpex’s Icthys liquefied natural gas development, for which it has been slated as the preferred engineering, procurement, construction and management contractor, and construction of the export jetty at Woodside Petroleum’s Pluto LNG project.
It also hopes to secure work at Chevron’s massive Gorgon gas project, Apache Corporation’s Devil Creek gas plant and Wesfarmers’ small scale LNG project.
Mr Smith said the company would also selectively target non-oil and gas EPC projects in Australia.
He said the tight labour market meant the company would search beyond Western Australia to staff its oil and gas division.
“We’re not in this for the short term, we’re in it for the long term, so ultimately, we will need to increase our labour force so we’ll be increasing our efforts to recruiting bright, young talent,” Mr Smith said.
