rcr - top pick 2005

Engineering group RCR Tomlinson today said it would be interested in acquiring parts of collapsed contractor Henry Walker Eltin Ltd (HWE).

HWE subsidiary Simon Engineering competes with the Perth-based contractor in a number of areas, RCR managing director John Linden said.

"We would be interested in parts of Simon Engineering that have synergy with our existing operations," he said. advertisement

The main attraction is Simon's outlying operations, such as its bases in Kalgoorlie and the Pilbara region in Western Australia, where RCR already has a presence.

"If it makes sense and we can increase the size of our presence by joining it with what they've currently got, that would be of interest," he said.

HWE appointed voluntary administrators on Monday after Glencore Finance AG declined to provide a proposed $100 million financial lifeline that would have enabled the group to repay debt and fund operating costs.

RCR has grown from a small operation in the regional WA city of Bunbury, with a $3 million annual turnover in 1990, into a listed company with a market capitalisation of $60 million and a turnover of more than $150 million through a series of acquisitions.

In addition to WA it now has facilities in Queensland, New South Wales, Victoria and South Australia employing around 700 staff.

Mr Linden said current activity in the contracting industry has surpassed the previous bull run in the 1980s and he expected it to continue for several years.

RCR has a number of large contracts in hand that are still more than a year from completion, and there are a number of major projects coming through the development pipeline, including the Gorgon gas project, significant expansions in the alumina industry, and new iron ore projects being floated by Fortescue Metals Group Ltd and Hancock Prospecting, he said.

"If they all happen this thing's going to last for another four or five years," Mr Linden said.

"But the hardest issue in boom times is controlling and managing the rate of growth."

RCR shares closed up one cent at 76 cents.