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MAH: Extended Banking Facility/New Work

Document date:  Thu 30 Aug 2001
Published:  Thu 30 Aug 2001 12:58:59
Document No:  201010
Document part:  A
Market Flag:  N
Classification:  Issued Capital - Other , Other

MACMAHON HOLDINGS LIMITED                     2001-08-30  ASX-SIGNAL-G

HOMEX - Perth                                                         

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Macmahon Holdings Ltd (Macmahon) today announced two significant
milestones which will both secure its future and contribute to
Macmahon's return to profitability in the current year.

EXTENDED BANKING FACILITY

Macmahon has successfully concluded negotiations with its principal
banker ANZ for a new 3 year banking arrangement for facilities
totalling $101 million. The facility includes working capital,
amortising debt over 3 years, Letters of Credit and Bank Guarantees.
Included within the facility structure are a number of performance
targets which will provide Macmahon with a potential lower interest
cost structure over the term of the facility.

In the last 12 months Macmahon has focussed on debt reduction and
achieved a $53 million reduction in its net debt down to $120 million
at 30 June 2001.

As part of the pricing of the new facility Macmahon will issue to ANZ
20 million new options in Macmahon. The new options have a grant
price of 15 cents and are exercisable as follows:

* Not before 30 June 2002 (unless change of control);

* Up to 50% upon the share price reaching 22.5c;

* Up to a further 50% upon the share price reaching 30.0c;

* Maximum of 2.0m shares can be sold in any 30 day period (unless
otherwise agreed).

Macmahon will cancel the existing 4 million options issued to ANZ in
November 2000.

Commenting on the new facility Macmahon CEO Mr Nick Bowen said:

"The negotiation of this 3 year facility with ANZ is a reflection of
the significantly improved financial position of the company and is
recognition by ANZ of our capacity to generate positive cashflow.
With the new banking facility secured Macmahon can now focus on
delivering profits to shareholders whilst at the same time reducing
debt in a controlled manner."

ANZ's Head of Natural Resources, Mr Clyde Moore said:

"One year ago, Macmahon's new management team developed a business
plan which refocussed the company on core activities. ANZ has worked
closely with Nick Bowen and his new team, and they have done an
impressive job of executing the plan. Macmahon's management have
earned the bank's confidence, and it is clear that their major mining
industry customers share our view."

NEW WORK

The first two months of the new financial year has been successful
for Macmahon with the award of new contracts valued at $94 million.

Macmahon's CEO Mr Nick Bowen said

"The new contracts which are with both new and existing clients has
taken Macmahon's current order book to $710 million. We are now in a
strong position of having 85% of this year's forecast turnover of
around $400 million secured. Equipment for these new contracts will
come from our existing fleet resulting in maximum fleet utilization
which will have a positive impact on cashflow and profitability."

The new contracts Include:

* A contract with BHP Iron Ore to develop the bulk sample pit at the
Mining Area C iron ore project north west of Newman in Western
Australia. Work will commence on site in September with a commitment
from Macmahon to a minimum of 5% indigenous employment.

The contract involves the construction of an access road to site,
mine development including the extraction of a 740,000 tonne bulk
sample and ore haulage to BHP Iron Ore's Orebody 25 crushing plant
some 120km away.

The Mining Area C contract extends Macmahon's relationship with BHP
Billiton following the award of the Blackwater Coal Pre-Strip
contract in May this year.

* Further work with Muswellbrook Coal Company (MCC) at their
Muswellbrook No 2 Open cut mine in NSW. Macmahon has been working
with MCC since May this year extracting crushing and screening
remnant coal in the No 1 open cut mine. This additional new 2 year
contract consists of waste removal, coal mining and rehabilitation
works in the main No 2 Open cut.

* A 30 month contract with St Barbara Mines to develop their first
underground mine at Meekatharra in Western Australia. The contract
involves some 8,000 metres of lateral and vertical mine development
and the production of 500,000 tonnes of ore from the Gibraltar and
Great Northern Highway gold projects. Decline development commenced
in August 2001 and the work force will peak at 90 personnel.

* A 6 month variation to the existing labour hire contract at the
Leinster Nickel Operation for WMC. Works involve the supply of
equipment and labour for the extension of the main decline and
development of future production levels. Macmahon has been working at
Leinster since September 1997.

* A 12 month contract with Merlin Diamonds Pty Ltd (managed by Argyle
Diamond Mines who are a subsidiary of Rio Tinto Ltd) at the Merlin
diamond mine located south east of Darwin in the Northern Territory.
The contract scope includes drill and blast, open cut mining,
crushing and mill feed with an estimated workforce of 50. This
contract is in addition to Macmahon's existing contract at the Argyle
Diamond Mine.

* Further work with North Ltd on behalf of Robe River Iron Associates
at the Cape Lambert port. Macmahon recently completed a major
contract incorporating bulk earthworks and sea wall construction. The
new contract involves the excavation and concrete works for a new
iron ore rail car dumper. The works are expected to take 9 months and
involve a workforce of up to 85.

Macmahon's CEO Mr Nick Bowen said:

"With the strength of the clients and the diversity of commodities;
iron ore, nickel, coal, diamonds and gold, these new contracts are a
very positive step for Macmahon. With both the new finance facility
and strong order book, Macmahon is now well placed in the Australian
mining and civil contracting industry."

Macmahon will release its results for the 2000/01 year on 13
September 2001.

For further information contact:

Mr Nick Bowen   Tel (08) 9365 1200   Mr Rick Blair Tel (06) 9365 1211
CHIEF EXECUTIVE OFFICER              CHIEF FINANCIAL OFFICER