3 Min Read
* UGL will have A$500 mln surplus cash following DTZ sale
* Will look at "everything that moves" in domestic engineering
* Expects to return to paying dividends in FY2015 (Recasts with possible acquisitions, adds CEO comment)
By Byron Kaye
SYDNEY, June 16 (Reuters) - Australian engineering services company UGL Ltd said it will consider all possible domestic acquisitions following the A$1.12 billion ($1.05 billion) sale of its property arm, but it is not actively considering any particular deal.
UGL chief executive officer Richard Leupen said the company, which has been struggling with high debt levels, will have about A$500 million in surplus cash after the sale of global real estate services business DTZ to TPG Capital Management, PAG Asia Capital and Ontario Teachers' Pension Plan.
The vendor confirmed the sale on Monday, a month after it reached a self-imposed sale deadline of May 16 with no compelling offer. The company said it wanted to exit DTZ a year ago to cut debt as its main engineering services division faces declining revenues due to a slowdown in the Australian mining sector.
"We will go back now to a point where (UGL) is very low geared and in a good shape to grab opportunities if they come along, but there aren't any priorities right now other than looking at everything that moves in domestic engineering," Leupen told Reuters.
UGL has been seen as a contender for infrastructure building business John Holland whose owner, Spanish-controlled construction giant Leighton Holdings Ltd, put it up for sale earlier this month. Asked about a possible bid for John Holland, Leupen said "that process has just begun".
UGL never wanted to "convert DTZ into cash to spend it elsewhere" but rather to "get both companies a good balance sheet", he added.
After paying down debt, UGL will have a cash surplus of about A$500 million and the board will consider what to do with it once the sale is finalised in about September, Leupen added.
In a statement to the Australian Securities Exchange, UGL said it expects to resume paying dividends in the 2015 financial year. The company slashed its final dividend in August 2013 and scrapped its interim dividend in February 2014.
Leupen will be replaced by Ross Taylor, chief executive of engineering company Tenix, in November, UGL said.
UGL shares were trading steady at A$6.94 in a flat overall market at 0232 GMT.
$1 = 1.0639 Australian Dollars Reporting by Byron Kaye; Editing by Ryan Woo and Stephen Coates