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The contractor went into a trading halt on Monday in a bid to raise equity, sparking rumours it was about to offload its construction arm to fellow giant Leighton.
Leighton confirmed the rumour later today, announcing it had signed a memorandum of understanding with Macmahon enabling it to acquire select Macmahon construction projects.
Leighton chief executive officer Hamish Tyrwhitt said the proposed transaction would build on the company’s core competencies.
The acquisition is worth about $16.3 million, subject to adjustments and selected plant and equipment.
Leighton revealed the firm had been in talks with Macmahon for a number of months regarding the acquisition of its construction arm.
Macmahon emerged from the trading halt with the news it would also offer new ordinary shares to raise approximately $80.7 million.
The offer price has been set at 16c per new share.
The company said funds raised would be used to strengthen the balance sheet following recent construction writedowns and to fund the future growth of the mining business.
Macmahon’s construction division has endured a troublesome year, with the company revealing a cost blowout on Rio Tinto’s Hope Downs 4 rail project in September.
Macmahon chief executive officer Ross Carroll said the net proceeds of the offer would be used to ensure Macmahon was well funded to support the growth of its mining operations as it restructured the company's activities to become a dedicated, full-service mining contracting business.
"The offer, together with the planned sale of construction, puts Macmahon in a strong position to maximise the opportunities for growth as it works towards a mining-focused future," he said.
"Combined, these two initiatives will set a clear direction for a new Macmahon with a core focus on the areas of the business in which it has delivered consistently good results over many years."
Macmahon mining contracts are currently valued at $1.9 billion.
The firm expects that figure to grow to more than $4 billion on the back of anticipated contract extensions and award of the Christmas Creek Mine expansion contract.
This article first appeared in ILN's sister publication MiningNews.net.
