Engineering and infrastructure company GRD has recommended a $106 million takeover offer from AMEC of the UK, saying it offers an attractive premium to shareholder in an uncertain market environment.
The 55 cents a share offer from AMEC is poor recompense for shareholders who saw the management reject a $2.75 a share offer a couple of years ago from Transfield Services (which had troubles of its own as well in the crunch in late 2008).
Seven Network helped thwart that offer by buying GRD shares around $2.35 and building a 12% stake in the Perth-based company.
Seven chairman Kerry Stokes was seen as coming to the aid of another Perth company in GRD, whose chairman was former WA Premier, Richard Court.
Seven has lost millions of dollars on that play.
Those shareholders who hung on as the resources slump and credit crunch bit GRD and the rest of WA, would have been very upset that the company said ‘no’ to Transfield.
Yesterday’s offer, which was first signalled in June, would have underlined that disappointment.’
The offer from AMEC of the UK represents a 34% premium to GRD’s closing share price of 41 cents on June 10, the last trading day before AMEC initially approached it with a non-binding proposal. But it $2.20 lower than the top range of the indicated offer from Transfield.
Now that AMEC has completed due diligence on GRD, the target has signed a binding agreement to sell its operations via a scheme of arrangement.
"The board believes the cash offer from AMEC represents a good opportunity for GRD shareholders to realise value and secure an attractive premium in an uncertain market environment," chairman Richard Court said in a statement to the ASX yesterday.
"The offer price also represents a 75 per cent premium to the three month volume weighted average price of GRD to June 10 of 31 cents<" GRD said in the statement.
"AMEC is very well positioned to continue the development of GRD," GRD chief executive Cliff Lawrence said in a statement.
"We believe AMEC’s strong financial position, global presence and quality business provides great benefits to GRD’s clients, employees and partners."
AMEC is a supplier of consultancy, engineering and project management services to the energy, power and process industries, similar activities to those in which GRD participates.
GRD shares closed on Friday at 49.5 cents each, and finished at 53 cents yesterday. There was no talk of a counter offer, more a case of package this one up and remove an embarrassment from the bourse.
Seven Network had cut its valuation of its 12% stake by $41.9 million a year ago. It will get just over $12 million from the AMEC offer.
CSR shares closed up 2% or 3.5 cents at $1.775 yesterday, despite credit ratings agency Fitch cutting the company’s long-term rating on building products and sugar producer by one notch.
Fitch yesterday dropped CSR’s long-term issuer default rating to BBB-minus, from BBB, and left the company on ratings watch negative, meaning another cut could happen.
"The ratings downgrade follow Fitch’s review of the company, taking into account CSR’s financial results, debt levels and medium-term earnings and cash flow outlook," Fitch said in a statement.
Fitch said while it recognised CSR’s operations were cyclical and that the company was well-placed to benefit from an economic recovery, it did not expect to see much improvement for at least a year.
"Fitch does not expect any discernible improvement in earnings until fiscal 2011, at the earliest, and considers CSR’s leverage and cash flow metrics as inconsistent with a BBB rating in the absence of an imminent recovery in earnings and cash flows," it said.
CSR last month announced plans to demerge its sugar business from its building products; aluminium and property operations to create two separately listed companies.
The shares have risen by around 12% in the past month as speculation has grown that several leading commodity groups from offshore may be interested in the company’s sugar arm.
The break up plan is still to be finalised and signed off. CSR has to resolve questions about the distribution of debt, get approval from lenders for the apportionment, and make sure that its asbestos liabilities in the building division will be more than adequately covered.
Management has said there won’t be any progress on the split for several months, but expect to have it basically resolved by the end of this year.
"While Fitch expects that CSR will ensure that both new entities will be appropriately capitalised, the agency believes that the ratings watch negative should remain until it is clear that neither of the new entities will be required to support excessive debt levels," the ratings group said.
Macquarie Airports (MAp) says passenger traffic fell across its portfolio of airports again in June, although the rate of decline has eased.
But its still negative.
The airport investor owns 74% of Sydney Airport, major stakes in Copenhagen, Brussels and Bristol airports and a minority investment in a Mexican airport group.
MAp said in a statement to the ASX yesterday that traffic at Sydney Airport fell by 4.1% in June to 2.415 million passengers, compared to the same month last year.
In May, Sydney Airport reported a 4.4% fall, compared with may 2008.
The Japanese market was again Sydney Airport’s worst performer in June, with visitor numbers down by 47% while the next worst
