Italian Webuild scoops up most of failed contractor Clough

Italian construction giant Webuild will take over most of the current and future projects of construction group Clough, which entered voluntary administration in December, cementing its spot as a major player in Australia.

The Milan-based $2.7 billion company had already agreed to take Clough’s position in the Snowy 2.0 and Inland Rail projects.

Webuild will also complete Energy Australia’s Tallawarra B gas-fired power station, Beach Energy’s Waitsia gas project in WA and naval base work for the Australian Government in Papua New Guinea in a deal announced last Friday.

Clough was facing up to $2 billion in financial claims, mostly linked to the Snowy Hydro 2.0 project.Credit: Jamila Todera

The company, formerly Salini Impregilo, will pay $36 million to add about 1000 employees in Australia and pick up Clough’s $6 billion backlog of projects, including a half share of a $3.8 billion contract to build the Perdaman urea plant in the Pilbara.

The deal has avoided loss claims from customers that could have hit $1.5 billion, according to administrator Deloitte.

Webuild said in a statement it regarded Australia as a key market, with potential construction contracts from 2022 to 2025 exceeding $460 billion.

The company is currently involved in the Sydney Metro-Western Sydney Airport project and the North East Link, the missing section of Melbourne’s beltway.

The acquisition of most of Clough will give Webuild about 3000 employees and an $18.5 billion queue of work in Australia if jobs where it is preferred bidder are included.

Clough is understood to have lost about 150 employees since it entered administration. Webuild will hope this deal stems the flow as the construction sector has a significant shortage of skilled workers.

Deloitte partner Sal Algeri said keeping projects going, people in their jobs and contractors paid had not been easy.

“In this case, every employee who wants to retain their job will be able to do so, and their entitlements are protected, sub-contractors have been paid via the interim funding arrangements we have been able to negotiate, and lost time on projects has been minimised,” he said.

Clough failed when its South African parent company, Murray and Roberts, withdrew support after its Australian subsidiary faced a cashflow crunch caused by rising costs on fixed price contracts that were behind schedule, especially Snowy 2.0, Waitsia and the Traveler petrochemicals plant project in Texas.

Friday’s announcement made no mention of the fate of the US project.

Deloitte will call a meeting in mid-February to seek approval from creditors of a deed of company arrangement that is needed to complete the sale to Webuild.