Snowy 2.0 contractor snaps up assets of collapsed partner at bargain price

The main contractor for the controversial Snowy 2.0 pumped hydro project has bought most of the key assets and contracts of its failed joint venture partner in a deal struck with the administrators.

The Italian-based Webuild is to pay $17.6 million for “selected assets” of Australian engineering company Clough, including its share of the Snowy 2.0 contract.

The price is significantly less than what it agreed with Clough’s parent company, the South Africa-based Murray & Roberts, in November and a month later walked away from after a closer inspection of its books.

That original deal included a peppercorn payment of just $500,000, but also absorbing a $300 million inter-company loan, and funnelling $30 million of cash into the cash-strapped Clough.

The collapse of that deal forced Murray & Roberts to put Clough into the hands of voluntary administrators because it was no longer able to provide funds to the company.

Webuild says the strategic rationale behind the purchase is still valid, and its major focus appears to be on the Snowy 2.0 and Inland Rail contracts.

The fate of other contracts – such as Clough’s kean role in the Project EnergyConnect transmission link between South Australia and NSW, and the Tallawarra gas station projects – is less certain.

Webuild says it has the option to extend the transaction scope to include other projects “if accretive conditions for the Group are guaranteed … with additional consideration payable should that option be exercised.

Webuild says the deal will allow Webuild to bolster its local organisation, engineering expertise and workforce, which is instrumental to the execution of its order backlog and commercial plan.

“Australia is currently Webuild second largest market after Italy with an order backlog of €8.9 billion, including projects for which Webuild is the preferred bidder, and a workforce of more than 1,800 people,” it said in a statement.

It noted that Clough, founded in Perth in 1919, is a major player in its sector and has a workforce of around 2,500 employees.

It provides sustainable and innovative solutions in the design, construction and maintenance of plants and infrastructures. Its landmark projects include the first high-rise in Perth, and the first major underground freeway tunnel in Western Australia.

More details to follow