Watpac eyes sale of mining biz as it struggles to win contracts
Mining services player Watpac is considering selling its mining business after failing to secure two major projects.
Watpac (ASX:WTP) told investors on Wednesday it was undertaking a “comprehensive review” of the mining business to determine the best option.
“This review will include exploring sale options for the business and/or its assets, either in part or in its entirety,” Watpac said.
Watpac provides mining services including project management, contract open-cut mining, drilling and blasting, and mineral and processing facilities for the iron ore, gold, mineral sands and coal sectors, among others.
The poor performance of the mining business is expected to see Watpac book an underlying net loss before tax of $3 million to $5 million for the 2018 financial year.
Watpac flagged in its recent half-yearly report that “failure to secure appropriate work levels in the group’s mining business represented a key risk to future profitability”.
Major shareholder BESIX Group SA recently tabled an offer of 92c per share to raise its stake in Watpac to 64.1 per cent from 28.1 per cent. The offer values the company at $168.7 million.
Watpac shares are trading at about 75c, giving it a market cap of $138 million.
The company said BESIX had confirmed that the latest earnings guidance update would not have an impact on the proposal.
A scheme booklet, including an independent expert report, will be lodged with ASIC shortly.
Watpac has been contacted for comment.