CIMIC to exit Middle East after AUD 1.8bn writedown

23 January 2020 - 12:00 am UTC

Shares in Australia’s CIMIC tanked today after the contractor said it plans to exit the Middle East with the sale of its 45% interest in BIC Contracting, a move that will result in a AUD 1.8bn (USD 1.24bn) writedown.

The stock plunged AUD 19.5% to close at AUD 28.16, compared with a 0.6% drop in the ASX 200 index, after the company said it will attribute the writedown for the financial year ended 31 December and that it will not pay a final dividend.

The unit of Spanish construction group ACS cited “an accelerated deterioration in market conditions” in the region for its decision and said it is in discussions with lenders, creditors and clients.

A number of potential buyers for all or part of BICC were shortlisted during a strategic review and confidential discussions with the parties are ongoing, CIMIC said.

The AUD 1.8bn post-tax writedown includes a AUD 700m cash payment that CIMIC made to BICC to cover its liabilities. These include debts owed to it by its joint venture partner Al Habtoor, which holds the remaining 55% of BICC, according to a local media report.  

The JV suffered financially after the Dubai property market crashed in 2008, forcing Leighton to take AUD 2bn of writedowns between 2010 and 2012, according to the report.

Al Habtoor entered into the JV with CIMIC – then known as Leighton Holdings – in 2007. The partnership was renamed BICC in 2015 when ACS acquired Leighton.

CIMIC said it will now focus its operations on its main markets of Australia, New Zealand and the Asia Pacific.

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