Jan 30, 2010
Polye backs Kramer-Ausenco merger
THE recent merger between PNG's Kramer Group and Australia's Ausenco has gain support of the country's minister for works, transport and Civil Aviation, Don Polye.
In the merger Ausenco Limited (ASX: AAX) ("Ausenco") has acquired a 50 percent equity interest in Kramer Group ("Kramer"), a leading PNG-based engineering company, providing a strategic local presence and access to the region's growing energy and resources market.
Mr Polye in a brief media release said the Kramer-Ausenco merger which occurred in early August 2009 is good for the country.
"It is pleasing to learn of the merger... I support this initiative as it will benefit the country in the long run in terms of lifting the profile of the country in the area of engineering.
"Both companies must be commended for taking a bold step forward in their respective endeavours to enhance their business operations within the region and at the global level."
Minister Polye encouraged other local companies to follow this as an example to support the government in its effort to boost the capacity of nationally owned companies to take on larger, more capital intensive projects within and outside of the country.
"Whilst similar mergers between foreign and PNG owned companies are encouraged it is important to emphasize the need to ensure that in all such arrangements equal or majority ownership must always be maintained locally so that a controlling authority is retained."
Ausenco Chief Executive Officer Zimi Meka said "the acquisition solidifies Ausenco's presence in an area of strategic importance to the oil and gas and resources sectors and enhances the solutions that Ausenco and Kramer offers to key clients in the region".
Through the acquisition, Kramer Group will be renamed KramerAusenco and will be managed by the existing Kramer Group team.
"KramerAusenco will provide a strong local presence and extensive infrastructure expertise in the South Pacific region, where investment in natural gas, gold and base metals is expected to grow significantly in the near future," Mr Meka said.
"Kramer's local experience, combined with our global expertise and strong balance sheet support, positions us well to deliver the significant projects planned for this region.
"Kramer Group already has a familiarisation with some of these projects, having provided early works services to support the multi-billion dollar PNG LNG project.
Kramer Group founder and Chief Executive Frank Kramer said he was very pleased to partner with Ausenco for what he saw as the next exciting phase of Kramer's growth.
"Together with Ausenco we are now able to offer an expanded range of services to our clients and we look forward to growing the business in PNG and the Southern Pacific Islands," he said.
Ausenco recently completed a well supported capital raising to, among other things, enable strategic acquisitions that assist in solidifying the diversified delivery of services in growth market sectors.
Mr Meka said he believed there were signs of improvement in the current market, but Ausenco's activities and financial results last year had been affected by delays in the timing of projects commencing.
"We've tendered for significant amounts of work with positive signs in recent months of improvements in most client sectors reinforced by the announcement of some recent project wins. The level of enquiries in all business lines has increased and we are looking positively to 2010. However, we have been faced with delays of several months beyond normal tendering processes before clients have made decisions about projects," he said.
"Solidifying our presence in key growth markets and sectors, like PNG infrastructure, oil and gas and resources, through equity interests in KramerAusenco will position us strongly for growth."
With annual 2008 revenues of $7 million (K22 million), Kramer Group has been operating for over 30 years and is the largest engineering and project management company in the South Pacific region. Kramer has approximately 100 employees based in Papua New Guinea, Australia, Solomon Islands, Vanuatu, Fiji, Samoa and Tonga.
Ausenco will have representation on the KramerAusenco Board, while KramerAusenco will have access to the full suite of Ausenco services and capital management. KramerAusenco's results will form part of Ausenco's process infrastructure business line.