THE Clean Energy Regulator has announced it will hold the second Emissions Reduction Fund auction for carbon abatement contracts on November 4 and 5.

“We are making this announcement today as the volume of projects registered in July indicates sufficient market readiness for a second auction,” said Ms Chloe Munro, chair of the Clean Energy Regulator. 

“With a growing number of methods available and a large number of new project registrations, we are confident the second auction will attract strong competition.”

“We understand that some potential participants will only apply to register their projects after an auction date has been announced. Our message for those that haven’t yet prepared their applications is do not leave it until the last minute,” Ms Munro said.

To ensure an orderly process leading up to the auction, the Clean Energy Regulator has decided that projects will not be eligible to participate in the auction unless a complete application for project registration is received at least 30 business days before the auction.

“For the November auction, the cut-off date to apply for project registration is Friday, 18 September 2015. Clients are encouraged to get in early to ensure their applications can be processed in time,” Ms Munro said.

Project applications submitted after this date, or those that require further information to be assessed will be eligible to qualify for future auctions.

The auction guidelines will be published on Friday, 21 August 2015. The guidelines will confirm that the auction format will be similar to the first auction. Bidding will be conducted in a single round through AusTender.

“We are required to provide a minimum of six weeks’ notice before an auction. We have chosen to provide the market with a longer notice period so that participants can be well prepared,” Ms Munro said.

www.cleanenergyregulator.gov.au

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Engineering & Mining Services Report with InterFinancial >>

INTERFINANCIAL mergers and acquisitions research has shown price-earnings (PE) multiples in the engineering and mining services (EMS) sector increased into May.

At the end of April, the EMS sector traded on a forward PE of 8.8x, compared with the ASX200 on 17.0x. At the end of May, the EMS sector traded on a forward PE of 9.0x, compared with the ASX200 on 17.6x.

One of the most dramatic deals in the recent period was the CCCC International Holding acquisition of John Holland from Leighton Holdings for about $950 million, including assumption of $100m in net debt. Leighton Holdings is also believed to be further delaying the sale of Leighton Properties. 

Cardno had an 18.74 percent stake acquired by Crescent Capital Management. The private equity firm raised its holding in Cardno by 10 percent for $43m in one week and have set the stage for a possible takeover.

Ahrens Group, the Australia-based company engaged in providing heavy construction, engineering and steel fabrication services, along with management of Pioneer Water Tanks, the Australia-based company engaged in manufacturing and installation of water storage tanks, has acquired the company from BlueScope Steel.

Force Equipment, the mining services company, has been acquired by Bankstown Group, an entity owned by Singapore-based entrepreneur George Ye, for an undisclosed sum.

Mirvac Group has acquired two development sites from CIMIC Group for about $120m. CIMIC is also mulling the sale of its offshore engineering services business.

Bradken is believed to have received an offer from KKR, which it rejected, shortly after Pacific Equity Partners and Koch Industries lodged a $2.50 per share offer in April.

Pacific Equity Partners and Koch Industries appear to be waiting to see how trading conditions develop before making any decisions around their rejected $2.50 per share takeover proposal. Of particular interest would be Bradken’s debt which stood at 2.7x EBITDA (earnings before interest, taxes, depreciation and amortization) at December end. A ratio of 3.0x EBITDA would breach its covenants.

Façade Access Holdings (FAH), the company backed by Wolseley Private Equity which holds construction and engineering business CoxGomyl, has acquired privately-held German group Manntech.

The combined revenue of the two businesses owned by FAH will now be in excess of 100 million euros, with a total of 600 staff. No further acquisitions are likely to follow the deal, with FAH focusing on integrating the back-offices of the two businesses.

Titan Energy Services has divested Hofco Oil Field Services for $13.5m. The sale of Hofco will facilitate the repayment of the existing senior debt facilities in full and provide working capital to enable the company to take advantage of future opportunities in the drilling and accommodation service business units.

In other moves, UGL is reportedly being circled by Transfield Services for a possible takeover. Transfield however has confirmed it will cut 137 jobs, as Chorus pares back spending on its copper broadband network.

Downer EDI has extended the Group’s $400m syndicated debt facility until maturity in April 2019. Downer also indicated that acquisitions are on its agenda. 

Cassini Resources expects to receive $6.5m in funding from MACA, GR Engineering Services and other investors as part of a 97m share private placement. MACA has subscribed for 2m shares and GR Engineering Services has subscribed for 1.4m shares, both at a price of $0.067 per share.

WorleyParsons may be an attractive target for private equity or Asian energy players with a focus on liquefied natural gas projects, with Japan’s JGC Corporation and Chiyoda Corporation rumoured to be the most likely due to their focus on LNG.

Downer EDI has received a ‘letter of intent’ (LoI) from Cobar Management advising of its intention to enter into a two year contract with Downer for mining services at the CSA Mine worth about $70m with an additional one year option.

Calibre Group has completed an on-market buy back of 7m shares for a total consideration of approximately $1.6m.

MACA’s contract with Sinosteel Midwest Corporation has been terminated following SMC’s decision to suspend mining operations at the Bluehills mining operation. The Bluehills project was due for completion in October and both mining and crushing services generated about $3.5m revenue per month.

Ausdrill subsidiary BTP Equipment has received a LoI from Peabody Energy Australia for the award of a four year, preferred equipment supply contract to Peabody Australia mine sites.

Sedgman has been awarded a second contract worth $12.4m at Twin Pines Minerals’ New Jersey facility in the US. This award follows on from the $18.5m contract award secured last month.

The scope of work for Sedgman includes engineering design, procurement, fabrication and delivery of a Relocatable Mineral Separation Plant to TPM’s site.

UGL is believed to have been approached by two potential buyers. One was understood to be a large private equity firm, while the other was a trade buyer.

Growthpoint Properties and Mapletree Investments are in a race to acquire the $120m K1 office tower from Lend Lease Group. Other groups known to look at the asset include Charter Hall Group and a high net worth private company. Bids have been placed for the asset and indicative pricing reflects a yield of about 7%.

Subzero has engaged an adviser to sell the company to mining services companies seeking to expand into Australia’s Hunter Valley.

AGL Energy is conducting a review of its asset portfolio and targeting divestment of around $1billion of non-strategic and underperforming assets by the end of FY2017.

Downer EDIhas been awarded a three year, $180m contract, with United Energy.

Transpacific Industries has engaged advisers to strengthen its defence team following recent management changes, falling margins and share price weakness. Beijing Capital Group paid $880m last year for Transpacific’s New Zealand business.

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The M&A specialists in engineering and mining services at InterFinancial, managing director Sharon Doyle, director Brett Plant and associate director Mark Steinhardt, compile market intelligence from their own private sources along with the Australian Securities Exchange (ASX), mergermarket.com and various other public information sources. Forecasts are consensus forecasts sourced from S&P Capital IQ.

www.interfinancial.com.au

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THE recent announcement by the Federal Government that it would postpone the introduction of Single Touch Payroll has been welcomed by the Institute of Public Accountants (IPA).

“We urged the government to consider the impact on many small businesses and it is pleasing that the government is taking a closer look,” IPA chief executive officer, Andrew Conway said. 

The Federal Government announced it would undertake extensive piloting “across a range of sectors” to ascertain the impacts and benefits of real time reporting of payroll information on small business entities.

“The confirmation that the government will concentrate only on mandatory reporting aspects of single touch payroll and not in relation to payment obligations, is also a welcome relief,” Mr Conway said.

“The pilot program should provide valuable insights before implementation proceeds. Small business needs to be reassured that the benefits are real and outweigh the costs.

“Australia should look favourably at technology advancements that streamline business efficiencies but we should do so in the appropriate way to avoid increasing the burden on many small businesses.

“For some businesses it will work quite well but in the case of many small and micro businesses, we may be increasing an unnecessary burden,” he said.

“It is an assumption and not necessarily reality that most businesses or their intermediaries have access to affordable cloud based software with a reliable internet connection.

“A one size fits all approach seldom works for the small business sector and this needs to be factored into pre-implementation planning to iron out problems before this initiative becomes mandatory.

“While it is a move to cut red tape for employers by simplifying tax and superannuation reporting obligations, the reality is that Single Touch Payroll has the potential to do the opposite for many micro and small businesses.

“The government’s decision to move slower on this initiative and engage in more consultation is a positive and welcomed step,” Mr Conway said.

www.publicaccountants.org.au

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