CIMIC buys back 10% of Thiess

Staff reporter

US investment fund manager Elliott Advisors has sold 10% of Thiess, the world’s largest contract miner, back to CIMIC Group for A$320 million (US$210 million).

CIMIC’s ownership of Thiess is now back at 60%.

The transaction follows Elliott’s 2020 purchase of 50% of Thiess in a circa-A$2.2 billion deal.

Thiess was reported to generate cA$4.1 billion annual revenue at the time, with a portfolio dominated by Australian and Indonesian coal contracts.

It subsequently paid A$350 million in 2022 for Western Australia-focused surface mining contractor, MACA, and last month said it was acquiring Australian underground hard-rock mining contractor Pybar for A$65 million.

“With more than 15,000 employees, Thiess operates in Australia, Asia and the Americas across more than 60 projects and had 2023 revenue of A$5.9 billion,” CIMIC said this week.

It retains a put option to buy the balance of Thiess from Elliott.

Fitch Ratings said in February this year Thiess generated about three-quarters of its revenue in Australia, “with most of the remaining revenue being generated in Indonesia”.

“We expect Thiess to meet its target of reducing its thermal coal exposure to less than 25% by 2027,” the ratings agency said.

“The company has reduced its thermal coal exposure significantly from around 50% of revenue in 2021.

“This decrease was driven by the acquisition of MACA Limited, which generates all its revenue from non-coal projects.

“We expect future reductions in thermal coal exposure to be supported by Thiess’ focus on the growing metal and mineral segments, as well as a more selective approach when bidding for new thermal coal contracts.

“Thiess’ work in hand of around $13.7 billion at 1H23 is well diversified by project and commodity, split across thermal coal (33%), metallurgical coal (35%), and metals and minerals (26%).”

Fitch said its BBB- long-term issuer default rating and stable outlook for Thiess was based on “low-to-mid-single-digit revenue growth from 2024-2026, [an] adjusted group EBITDA margin of around 20% in 2024 and around 20.5% in 2025 [and] capex of around 12% of revenue from 2024-2026”.

“Thiess also has reasonable access to capital, as shown in 2023 when it completed the refinancing of it’s a$1.6 billion bridge loan with a new syndicated loan,” the agency said.

“Its rating could come under pressure if it does not outline a plan to address the debt maturity wall.

“Thiess had a cash balance of $255 million at 1H23 and had access to a further $125 million through its undrawn revolving credit facility. The $400 million RCF was refinanced in August 2023 and the maturity was extended to December 2025.

“Its only short-term debt consists of under $30 million of annual debt amortisations.

“Thiess remains exposed to debt concentration risk, as nearly all of its outstanding debt will mature in December 2025.”

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