Cimic has announced it will repay $9.8 million to 420 former BICC employees.
The post Cimic (ASX:CIM) share price recovers slightly on repayment pledge, closes 13% lower appeared first on The Motley Fool Australia. –
The Cimic Group Ltd (ASX: CIM) share price had a dramatic start to the week, with its shares tumbling to end Monday’s session 13.37% lower.
However, that’s better than its earlier performance. The company’s stock plunged 15% to $15.51 this morning before a pause in trading.
The initial slide came amid reports the company owed former employees millions of dollars of wages, entitlements, and compensations after it sold its 45% stake in Middle-Eastern company BIC Contracting (BICC).
Cimic’s shares began swapping hands again this afternoon after it provided a statement to rebut the claims.
The response followed the ASX issuing the company with a ‘please explain’ over its tumble, which saw it hit a new 52-week low of $15.28 in intraday trade.
As of today’s close, the Cimic share price is $15.88. For reference, it finished Friday’s session at $18.33.
Let’s take a closer look at what went on with the construction, mining, and services company’s shares today.
Cimic share price rebounds on $9.8 million pledge
Cimic responded to a media report that it believes tanked its share price today. The company says it was never in charge of BICC, but will still help provide former workers with their owed funds. The company stated:
BICC has never been and is not currently controlled by CIMIC. CIMIC, its co-shareholder and the acquirer continue to progress the completion of the sale and are working collaboratively through the remaining conditions precedent …
However, the wellbeing of BICC people is important to CIMIC and we will continue to work with the acquirer to resolve this matter.
According to the company, it is working with BICC’s purchaser SALD Investment to pay end of service entitlements to approximately 2,720 former employees.
Cimic stated 1,900 have already received their entitlements. Meanwhile, 400 former employees have had their entitlements processed.
Cimic is now working to provide the remaining 420 people with their owed money. Doing so will come at a cost of US$7 million ($9.85 million).
Of the 420 people who haven’t yet been paid, 300 are based in Qatar.
That’s important as the Qatari business is currently under curatorship. The curatorship is said to be impacting the speed at which people are receiving their payments.
The 120 people not from Qatar are living in the United Arab Emirates and Saudi Arabia. Together, they have 60 settlements subject to dispute.
According to Cimic, the $9.85 million it will spend to provide workers with their entitlements will be available to the acquirer as part of the sale process.
As of Monday’s close, the Cimic share price is 38% lower than it was at the start of 2021. It has also fallen 15% since this time last month.
The post Cimic (ASX:CIM) share price recovers slightly on repayment pledge, closes 13% lower appeared first on The Motley Fool Australia.
Should you invest $1,000 in Cimic right now?
Before you consider Cimic, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Cimic wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.