The West

Kenny rises to AusGroup challenge

It's turning out to be three times a charm for Stuart Kenny.

The founder of AusGroup was hastily drafted back into the managing director's job last year when the resources contractor found itself in deep trouble.

His predecessor had quit after the WA-based, Singapore-listed company suffered a $15 million quarterly loss and breached banking covenants. By December, there were fears it was headed for insolvency as banking facilities were about to expire.

Cut to the present and AusGroup's situation is vastly improved.

The company has secured fresh financial backing of up to $70 million. Its share price has tripled from recent lows. And this month Singapore oil and gas logistics provider Ezion took a 7 per cent stake in AusGroup.

The two companies have made a deal to collaborate in Australia. Ezion has been allocated options which could lift its stake to 19 per cent if fully exercised.

"Challenging, obviously," is how Mr Kenny describes his time in a job he last filled in an acting capacity in 2011.

"It hadn't been my plan to come back in," he said. "But because of the oversight that I'd had (as a board member) I found I was able to step back in with a minimum of disruption business-wise.

"The board needed to take some action and it did. But it certainly put my private life on hold."

Mr Kenny said by ending its relationship with ANZ Bank and HSBC Australia, AusGroup was able to control its own destiny.

He said that move had been taken out of context by some observers. "By removing the banks, it removed any external influences from the business," he said. "It freed up our balance sheet to then go to the market to source new funding options."

In the interim, the contractor has secured backing from Singapore's DBS Bank and finance and investment house Wingate Group.

"We've overcome the speed bump and we are in business," Mr Kenny said. "In fact, we're somewhat different to a lot of our competitors in the market."

Involved in fabrication and construction through its AGC subsidiary, AusGroup has shifted its focus from mining to oil and gas. It is moving towards more maintenance work as projects move into the operational phase.

Mr Kenny is optimistic about Ezion, which already has a presence in Australia through Perth-based Teras Australia.

"It's early days," he said. "I see synergies but we have to work with each other to develop the opportunities."

The West Australian

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