Michael Finnegan sees bright future for Mcmahon Holdings

Macmahon Holdings chief executive Michael Finnegan has for the first time publicly talked up the company’s prospects.

Macmahon Holdings chief executive Michael Finnegan in Melbourne yesterday. Picture: Aaron Francis.

Macmahon Holdings chief executive Michael Finnegan has for the first time publicly talked up the company’s prospects following a $175 million takeover bid from rival CIMIC, as another of the target’s shareholders urged the board not to hand over control “on the cheap”.

The Spanish-owned CIMIC’s first supplementary bidder’s statement issued yesterday urged shareholders to sell into the offer, pointing to Macmahon’s poor ­financial performance over the past two years and a 41 per cent drop in the value of its order book over the period.

It also claimed its target was heavily reliant on the Tropicana gold project for its revenue, that it had incurred losses on its Telfer, Mongolian and Nigerian contracts and that it had failed to pay dividends for four consecutive years.

But while he would not comment directly on CIMIC’s bid, Mr Finnegan said he was confident the company had dealt with its legacy issues and was well placed to enjoy the fruits of an upswing in the commodities cycle. Macmahon counts Rio Tinto, AngloGold Ashanti and Newcrest among its high-profile customers.

“We are right-sized now from an overhead perspective,” Mr ­Finnegan told The Australian in his first media interview since ­taking over as CEO last October.

“Our legacy issues are largely resolved with the exit from Nigeria. And with the exception of ­Telfer, we have a portfolio of projects that are now on or are above forecast. And we are positioned to take advantage of a market that is showing signs of improvement.”

Telfer is forecast to be profitable this year.

There is speculation Macmahon may announce new contracts in coming weeks. CIMIC, formerly known as Leighton, ­already holds a 22.95 per cent stake in Macmahon and its 14.5c-a-share bid values the company at $175m.

Macmahon’s directors last week urged shareholders to take no action and said the offer ­undervalued the company.

Steven Johnson’s Forager Funds Management has backed the directors’ position and lifted its holding in Macmahon from 7.36 to 8.66 per cent.

Yesterday Sandon Capital founder Gabriel Radzyminski, a Macmahon shareholder, urged the company to “put its best foot forward and not be discouraged by the lowball offer from CIMIC”.

“There is no good reason for them to hand control to CIMIC on the cheap,” he said.

While he said Sandon had not made a final decision on the bid, he noted it was not averse to ­remaining as a minority investor in a listed Macmahon even if CIMIC were to secure control of the company. “As long as there is value there,” he said.

Sandon has been a minority investor in the listed Warrnambool Cheese & Butter company controlled by Canadian dairy giant Saputo and is again frustrating its latest bid to take 100 per cent control of the Australian firm. “A lot of other fund managers blink too quickly in these ­situations thinking someone else who gets control is going to do bad things to me,” Mr Radzyminski said.

Mr Finnegan joined the company in 2014 with more than 20 years of experience in the mining industry. He previously held senior roles within Leighton in its Asian mining business. Asked if he anticipated CIMIC may one day move on the company when he took the job, he replied: “It was always a ­possibility but there were a number of things that could happen. “We have just been focused on making sure we were not distracted from the day-to-day and making sure the ­performance ­improved.”

He said his goal in taking over was to have a series of contracts where every project was profitable. “We wanted a real contracting mentality that focused on the lessons we learned during previous cycles. We were thinking the market was showing signs of recovery. If we could instil the right structure, get the right contracting mentality within the people, we could be successful.

“But we did not want to forget the lessons from previous cycles ... We keep preaching at the ­moment to the teams — ‘make sure we behave properly in the tough times. Don’t destroy relationships because it will put us at the front of the queue as things come back’.”