...- Australia-based construction group CIMIC Group Ltd. sold a 50% equity interest in Thiess, the world's largest mining services provider, in December 2020. In our view, the disposal reduces the business scale and diversity of CIMIC and its ultimate parent, Spain-based construction group Actividades de Construccion y Servicios SA (ACS), and adds complexity to the group structure and governance. - CIMIC's financial performance deteriorated significantly in fiscal 2020, well below our expectations. A COVID-related slowdown in new project awards and a temporary suspension of a tendering license in Hong Kong (now regained) led to significant working capital outflows and squeezed the company's earnings and cash flow. - As a result, we project CIMIC's adjusted leverage (S&P adjusted debt to EBITDA) will likely exceed 2.5x in the fiscal year ending Dec. 31, 2021, and remain above 2x in the next two years. Given the higher financial leverage and CIMIC's reduced business scale and diversity, we have...
