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Shares of engineering firm Murray & Roberts (M&R) slumped by double digits on Monday morning, after it said its proposed R4 billion sale of its Australian business unit Clough had fallen through, resulting in a business rescue process.
Along with the sale of Clough to Milan-based Webuild, the parties were also contemplating a A$30 million (R352 million) interim loan facility to avoid putting the business into voluntary liquidation proceedings, although the deadline for this has now passed. Due to this the parties have "mutually and unconditionally" decided to call off the proposed transaction.
In early trade on Monday M&R's shares had slumped 13.47% to R4.11, having fallen 70.66% so far in 2022. Click here for more details on M&R's shares and other info.
Earlier in 2022, M&R had warned of a crash crunch at the subsidiary, with global supply chain delays causing project delays, with the working capital needs of Clough being "urgent".
M&R first acquired a minority interest in Clough in 2004 before buying out all the other minority shareholders in 2013. Clough accounted for 62% of the group’s R59.5 billion order book in financial year 2022, along with 57% of its R29 billion in revenue. It also made a similar contribution to the group’s R705 million operating profit.
Deloitte Australia has been appointed as administrators, with M&R saying "for an Australian company, voluntary administration is a flexible, short-term process" which is aimed at maximising the chances of a company's survival, or as much of the business as possible.
"As such, this process has, since its introduction in 1993, resulted in the preservation of many great Australian businesses, which might otherwise have simply been liquidated," it said.