Prospectus and Notice of Meeting - WorleyParsons.com
Prospectus and Notice of Meeting - WorleyParsons.com
Prospectus and Notice of Meeting - WorleyParsons.com
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ABN 17 096 090 158<br />
<strong>Prospectus</strong> <strong>and</strong><br />
<strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong><br />
An Entitlement Offer <strong>of</strong> approximately<br />
22.9 million New Shares at $21.00 per<br />
share to raise approximately $480 million<br />
Financial Advisor <strong>and</strong> Lead Manager
Table <strong>of</strong> contents<br />
Section 1 Details <strong>of</strong> the Entitlement Offer 17<br />
Section 2 <strong>WorleyParsons</strong>’ existing business 23<br />
Section 3 Colt 31<br />
Section 4 Canadian hydrocarbons market 43<br />
Section 5 Effect <strong>of</strong> the Acquisition <strong>and</strong> Entitlement Offer 49<br />
Section 6 Independent Accountant’s Report 57<br />
Section 7 Board <strong>of</strong> Directors <strong>and</strong> executive group 61<br />
Section 8 Risk factors 67<br />
Section 9 Additional information 73<br />
Section 10 <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong> 93<br />
Section 11 Glossary <strong>of</strong> terms 99<br />
Appendix Terms <strong>of</strong> Special Voting Share 103<br />
Important information<br />
This <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong><br />
This document (Document) <strong>com</strong>prises a prospectus<br />
(<strong>Prospectus</strong>) <strong>and</strong> a notice <strong>of</strong> meeting (<strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong>)<br />
both issued by <strong>WorleyParsons</strong>. The <strong>Prospectus</strong> is for the<br />
issue <strong>of</strong> New Shares under the Entitlement Offer <strong>and</strong> the<br />
<strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong> is for a meeting <strong>of</strong> Shareholders to<br />
consider <strong>and</strong> pass resolutions relating to the issue <strong>of</strong> the<br />
Special Voting Share <strong>and</strong> the maintenance <strong>of</strong> <strong>WorleyParsons</strong>’<br />
capacity to issue further capital.<br />
This Document is important <strong>and</strong> requires your immediate<br />
attention. You should read this entire Document carefully before<br />
deciding whether to invest in the New Shares. In particular, it is<br />
important that you consider the risk factors (see Section 8) that<br />
could affect the financial performance <strong>of</strong> <strong>WorleyParsons</strong> before<br />
deciding what course you should follow.<br />
If you are unclear as to the course you should follow, then<br />
you should consult your pr<strong>of</strong>essional advisor immediately.<br />
This Document is dated 14 February 2007 <strong>and</strong> a copy <strong>of</strong><br />
this Document was lodged with ASIC on that date. This<br />
<strong>Prospectus</strong> expires on the date 13 months after it was<br />
lodged (Expiry Date). No New Shares will be allotted or<br />
issued on the basis <strong>of</strong> this <strong>Prospectus</strong> after the Expiry Date.<br />
ASIC <strong>and</strong> ASX take no responsibility for the contents <strong>of</strong> this<br />
Document.<br />
Within seven days after the date <strong>of</strong> this Document,<br />
<strong>WorleyParsons</strong> will apply to ASX for the New Shares to be<br />
quoted on ASX.<br />
Offering Restrictions<br />
This Document has been prepared to <strong>com</strong>ply with the<br />
requirements <strong>of</strong> the laws <strong>of</strong> Australia.<br />
The Entitlement Offer is generally not being extended to<br />
any Shareholder whose registered address is outside <strong>of</strong><br />
Australia or New Zeal<strong>and</strong>, <strong>and</strong> persons who receive this<br />
Document (including an electronic copy) in jurisdictions<br />
outside Australia <strong>and</strong> New Zeal<strong>and</strong> should ignore those<br />
Sections which relate to the Entitlement Offer, although the<br />
Document is being sent to all Shareholders as it contains the<br />
<strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong>. Any failure to <strong>com</strong>ply with foreign legal<br />
restrictions in connection with the Entitlement Offer may<br />
constitute a violation <strong>of</strong> applicable securities laws, <strong>and</strong><br />
persons who enter into possession <strong>of</strong> this Document should<br />
seek advice on <strong>and</strong> observe any such restrictions. This<br />
Document does not constitute an <strong>of</strong>fer or invitation in any<br />
place in which, or to any person to whom, it would not be<br />
lawful to make such an <strong>of</strong>fer or invitation.<br />
In particular, the New Shares have not been, <strong>and</strong> will not be,<br />
registered under the US Securities Act <strong>and</strong> may not be<br />
<strong>of</strong>fered or sold in the US or to, or for the account or benefit<br />
<strong>of</strong>, US Persons except, to the extent <strong>WorleyParsons</strong><br />
considers appropriate, in transactions exempt from the<br />
registration requirements <strong>of</strong> the US Securities Act <strong>and</strong><br />
applicable US state securities laws.<br />
No representations other than in this Document<br />
No person is authorised to give any information or to make<br />
any representation in connection with the Entitlement Offer<br />
which is not contained in this Document. Any information or<br />
representation not so contained may not be relied on as<br />
having been authorised by <strong>WorleyParsons</strong>.<br />
Document availability<br />
A free paper copy <strong>of</strong> this Document is available to<br />
Qualifying Shareholders during the Entitlement Offer Period<br />
by calling the <strong>WorleyParsons</strong> Entitlement Offer InfoLine<br />
on 1300 738 801 (Australia) or 61 3 9415 4601<br />
(International). The electronic version <strong>of</strong> this Document<br />
may be viewed <strong>and</strong> downloaded from <strong>WorleyParsons</strong>’<br />
website: www.worleyparsons.<strong>com</strong>. An electronic version<br />
<strong>of</strong> this Document is only available online to persons resident<br />
in Australia <strong>and</strong> New Zeal<strong>and</strong>. Persons who access the<br />
electronic version <strong>of</strong> this Document must ensure that<br />
they download <strong>and</strong> read the entire Document.<br />
Future Performance<br />
Except as required by law, <strong>and</strong> only then to the extent so<br />
required, neither <strong>WorleyParsons</strong> nor any other person<br />
warrants the future performance <strong>of</strong> <strong>WorleyParsons</strong> or any<br />
return on any investment made pursuant to this Document.<br />
Definitions<br />
Certain terms <strong>and</strong> abbreviations used in the Document have<br />
defined meanings, which are explained in the Glossary <strong>of</strong><br />
terms. The financial amounts in this Document are<br />
expressed in Australian currency unless otherwise stated.<br />
Photographs <strong>and</strong> diagrams<br />
Photographs <strong>and</strong> schematic drawings appearing in this<br />
Document do not depict assets or equipment owned or used<br />
by <strong>WorleyParsons</strong> or Colt or an activity conducted by<br />
<strong>WorleyParsons</strong> or Colt unless otherwise indicated. Diagrams<br />
used in the Document are illustrative only <strong>and</strong> may not be<br />
drawn to scale. Unless otherwise stated, all data contained<br />
in charts, graphs <strong>and</strong> tables is based on information<br />
available at the date <strong>of</strong> this Document.<br />
Enquiries<br />
If you have any questions in relation to the Entitlement<br />
Offer, please contact your stockbroker, accountant or other<br />
pr<strong>of</strong>essional advisor. If you have questions in relation to<br />
how to <strong>com</strong>plete the Entitlement Form, please call the<br />
<strong>WorleyParsons</strong> Entitlement Offer InfoLine on 1300 738 801<br />
(Australia) or 61 3 9415 4601 (International).<br />
Privacy<br />
Please read the privacy statement located at Section 9.17.<br />
By submitting the Entitlement Form in or ac<strong>com</strong>panying this<br />
Document, you consent to the matters outlined in that<br />
statement.
Letter from the Chairman<br />
14 February 2007<br />
Dear Shareholder,<br />
It is my pleasure to invite you to participate in the next<br />
stage <strong>of</strong> <strong>WorleyParsons</strong>’ growth through this Entitlement<br />
Offer <strong>of</strong> 22.9 million New Shares at $21.00 per share<br />
On 8 February 2007, <strong>WorleyParsons</strong> announced it had agreed<br />
to acquire The Colt Companies (Colt), a Canadian engineering<br />
<strong>and</strong> project services partnership, for C$1,035 million<br />
(A$1,133 million). Colt is a leading provider <strong>of</strong> project services<br />
to the hydrocarbons industry in Canada <strong>and</strong> Alaska.<br />
The acquisition <strong>of</strong> Colt represents an exciting opportunity for<br />
<strong>WorleyParsons</strong>. The Acquisition will place <strong>WorleyParsons</strong> in a<br />
leading position in the Canadian hydrocarbons market <strong>and</strong><br />
materially enhance <strong>WorleyParsons</strong>’ heavy oil, oil s<strong>and</strong>s <strong>and</strong><br />
cold weather technical capabilities. The Combined Group will<br />
employ approximately 20,400 employees across 97 <strong>of</strong>fices<br />
in 30 countries, including over 5,000 people in Canada. The<br />
exp<strong>and</strong>ed operational base <strong>of</strong> the group is expected to create<br />
opportunities for extending existing relationships <strong>and</strong><br />
creating new ones <strong>and</strong> will enhance our ability to win <strong>and</strong><br />
execute major projects in Canada <strong>and</strong> Alaska.<br />
Larry Benke, President <strong>of</strong> Colt, will be responsible for<br />
<strong>WorleyParsons</strong>’ exp<strong>and</strong>ed Canadian operations with his<br />
management group <strong>com</strong>ing from both Colt <strong>and</strong><br />
<strong>WorleyParsons</strong>’ existing Canadian <strong>and</strong> international<br />
operations.<br />
We are delighted that Larry has also agreed to act, subject<br />
to Completion, as Bill Hall’s alternate on the Board. Key Colt<br />
management, who currently own the majority <strong>of</strong> the<br />
business, will receive on average over 30% <strong>of</strong> their<br />
consideration in <strong>WorleyParsons</strong> Exchangeable Shares,<br />
<strong>and</strong> have agreed to stay with <strong>WorleyParsons</strong> for at least<br />
three years.<br />
On a normalised pro forma basis, the Acquisition would have<br />
been 21.0% EPS accretive (before synergies, amortisation<br />
<strong>and</strong> additional corporate costs) for the 12 months to<br />
31 December 2006. Further information on Colt, the<br />
rationale for the Acquisition, the benefits for <strong>WorleyParsons</strong>,<br />
financial information on the businesses, key risks associated<br />
with the Acquisition <strong>and</strong> the businesses being acquired, is<br />
set out in Sections 3, 5 <strong>and</strong> 8 <strong>of</strong> this Document.<br />
The Acquisition is to be funded by a <strong>com</strong>bination <strong>of</strong> a<br />
pro rata renounceable Institutional Entitlement Offer <strong>and</strong><br />
Retail Entitlement Offer, the issue <strong>of</strong> Exchangeable Shares<br />
to the Vendors <strong>and</strong> new debt facilities. The Institutional<br />
Entitlement Offer <strong>of</strong> 16.2 million New Shares was <strong>com</strong>pleted<br />
on 13 February 2007 <strong>and</strong> raised $339 million for<br />
<strong>WorleyParsons</strong>. The Retail Entitlement Offer, in which you<br />
are invited to participate, is expected to raise an additional<br />
$141 million <strong>and</strong> has been fully underwritten.<br />
You are entitled to take up 1 New Share for every 9 Existing<br />
Shares you owned at 7.00pm (AEST) on 14 February 2007.<br />
To apply for shares, you should use the Entitlement Form<br />
ac<strong>com</strong>panying this Document. If you renounce your<br />
Entitlement to purchase New Shares, you may receive a<br />
payment for the renounced Entitlement, to be determined by<br />
the Retail Bookbuild.<br />
This Document contains full details <strong>of</strong> the Acquisition <strong>and</strong><br />
its funding, <strong>and</strong> constitutes a prospectus in relation to the<br />
Retail Entitlement Offer. Please take time to read it carefully<br />
before deciding whether to invest. If you are uncertain as<br />
to whether taking up the Entitlement Offer is a suitable<br />
investment for your purposes, you should consult your<br />
stockbroker, accountant or other pr<strong>of</strong>essional advisor.<br />
This Document also contains a <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong> in relation<br />
to an Extraordinary General <strong>Meeting</strong> <strong>of</strong> Shareholders to be<br />
held at 2.00pm (AEST) on 2 April 2007. In summary,<br />
Shareholders will be asked to approve resolutions for the<br />
issue <strong>of</strong> a Special Voting Share, a new class <strong>of</strong> share in the<br />
capital <strong>of</strong> <strong>WorleyParsons</strong>, as part <strong>of</strong> the Acquisition, <strong>and</strong> to<br />
maintain <strong>WorleyParsons</strong>’ capacity to issue further capital.<br />
The transaction is not subject to Shareholder approval.<br />
Certain members <strong>of</strong> senior management that are also<br />
Shareholders have <strong>com</strong>mitted to vote any Shares they control<br />
in favour <strong>of</strong> the resolutions.<br />
On behalf <strong>of</strong> the Board <strong>of</strong> Directors <strong>of</strong> <strong>WorleyParsons</strong>,<br />
I <strong>com</strong>mend this Entitlement Offer to you, <strong>and</strong> encourage you<br />
to read this Document carefully <strong>and</strong> to vote in favour <strong>of</strong> the<br />
resolutions at the Extraordinary General <strong>Meeting</strong>.<br />
Yours faithfully,<br />
Ron McNeilly<br />
CHAIRMAN<br />
<strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong><br />
1
Message from the Chief Executive Officer<br />
The acquisition <strong>of</strong> Colt is a unique opportunity<br />
for <strong>WorleyParsons</strong> to gain a leading position in the<br />
Canadian hydrocarbons market<br />
<strong>WorleyParsons</strong> is a <strong>com</strong>pany specialising in the provision <strong>of</strong><br />
pr<strong>of</strong>essional services to the energy, resource <strong>and</strong> <strong>com</strong>plex<br />
process industries. <strong>WorleyParsons</strong> has a history <strong>of</strong> strong<br />
growth, having achieved 67% <strong>com</strong>pound annual growth<br />
in net pr<strong>of</strong>it after tax since listing on ASX in 2002.<br />
This growth has been achieved through good operational<br />
performance <strong>and</strong> a <strong>com</strong>bination <strong>of</strong> successfully integrated<br />
acquisitions, including the <strong>com</strong>pany-transforming acquisition<br />
<strong>of</strong> Parsons E&C in 2004, <strong>and</strong> a range <strong>of</strong> smaller acquisitions<br />
<strong>and</strong> investments.<br />
<strong>WorleyParsons</strong> has been seeking greater exposure to the<br />
rapidly growing Canadian hydrocarbons market for some time.<br />
The Acquisition will enable us to <strong>com</strong>bine Colt with our<br />
already substantial Canadian operations to form an<br />
organisation that is appropriate for the level <strong>of</strong> dem<strong>and</strong> in<br />
the market.<br />
Colt is a multi-disciplinary design <strong>and</strong> project services<br />
business with impressive upstream <strong>and</strong> downstream<br />
hydrocarbons capabilities, particularly in the growing oil s<strong>and</strong>s<br />
sector. It is one <strong>of</strong> the largest providers <strong>of</strong> these services<br />
in Canada. It also operates a joint venture, NANA/Colt in<br />
Alaska, <strong>and</strong> has a developing presence in the power sector.<br />
Like <strong>WorleyParsons</strong>, Colt has a track record <strong>of</strong> strong <strong>and</strong><br />
pr<strong>of</strong>itable growth having achieved <strong>com</strong>pound annual<br />
Adjusted EBITDA growth <strong>of</strong> 47% between the years ended<br />
31 January 2004 <strong>and</strong> 31 January 2007 (estimated).<br />
The Combined Group will extend <strong>WorleyParsons</strong>’ position<br />
as a tier 1 service provider to the global upstream <strong>and</strong><br />
downstream hydrocarbons industry. Providing Colt with the<br />
support <strong>of</strong> <strong>WorleyParsons</strong>’ global resources <strong>and</strong> systems will<br />
significantly enhance Colt’s ability to fulfil the dem<strong>and</strong> that<br />
exists in the Canadian market.<br />
Colt has been a leader in utilising alliance contracting in<br />
Canada which has provided a strong base on which it has<br />
successfully grown its project capability. Given our <strong>com</strong>bined<br />
alliancing capabilities, we believe there will be opportunities<br />
to further broaden the application <strong>of</strong> alliancing in this market.<br />
Culturally, Colt is an excellent fit with <strong>WorleyParsons</strong>, given<br />
its focus on long-term relationships, technical excellence,<br />
retention <strong>and</strong> development <strong>of</strong> its people, cost-reimbursable<br />
contracting <strong>and</strong> health, safety <strong>and</strong> environmental<br />
performance. We believe the acquisition <strong>of</strong> Colt will assist us<br />
in achieving our six key strategic objectives:<br />
<strong>com</strong>mitted, empowered <strong>and</strong> technically capable people;<br />
industry leadership in health, safety <strong>and</strong> environmental<br />
performance;<br />
outst<strong>and</strong>ing operational <strong>and</strong> corporate performance;<br />
focus on long-term contracts;<br />
success in project delivery – large <strong>and</strong> small; <strong>and</strong><br />
strengthen geographic presence.<br />
I am delighted that Larry Benke, President <strong>of</strong> Colt, <strong>and</strong> his key<br />
management staff have agreed to join us at this exciting<br />
time. Subject to Completion, they have <strong>com</strong>mitted to work for<br />
<strong>WorleyParsons</strong> for at least three years. <strong>WorleyParsons</strong>’<br />
greatest strength remains the quality <strong>of</strong> its people, <strong>and</strong><br />
Larry’s team will be a positive addition to <strong>WorleyParsons</strong>’<br />
ranks.<br />
The acquisition <strong>of</strong> Colt is an exciting opportunity for<br />
<strong>WorleyParsons</strong>. We expect the Acquisition to add significantly<br />
to our existing capabilities <strong>and</strong> provide value for our<br />
Shareholders.<br />
I <strong>com</strong>mend this Entitlement Offer to you.<br />
John Grill<br />
CHIEF EXECUTIVE OFFICER<br />
2 <strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong>
Key investment<br />
themes<br />
1 Key player in Canadian hydrocarbons<br />
Colt is a leading project services provider to the Canadian <strong>and</strong> Alaskan hydrocarbons<br />
industries, <strong>and</strong> a leader in project delivery for the heavy oil <strong>and</strong> oil s<strong>and</strong>s industries.<br />
Canada has the world’s second largest volume <strong>of</strong> oil reserves <strong>of</strong> which 97% are oil<br />
s<strong>and</strong>s. Oil production is expected to increase from 2.5 million barrels per day in 2005<br />
to four million barrels per day in 2012. Canadian oil is exported almost exclusively to<br />
the US, which imports more crude oil from Canada than any other country.<br />
Colt’s extensive experience ensures it is well positioned to take advantage <strong>of</strong> this<br />
rapidly growing market.<br />
Experienced <strong>and</strong> <strong>com</strong>mitted management team<br />
2 with strong customer relationships<br />
Colt, which is currently wholly owned by its current <strong>and</strong> former employees, is run by<br />
an experienced management team with long-st<strong>and</strong>ing customer relationships.<br />
3 Strong <strong>and</strong> pr<strong>of</strong>itable growth<br />
Colt has delivered strong earnings growth over the last four years, achieving<br />
<strong>com</strong>pound annual Adjusted EBITDA growth <strong>of</strong> 47% between the years ended<br />
31 January 2004 <strong>and</strong> 31 January 2007 (estimated). A strong contract backlog gives<br />
<strong>WorleyParsons</strong> confidence in Colt’s financial performance for the medium term.<br />
4 Extensive global hydrocarbons business<br />
The <strong>com</strong>bined <strong>WorleyParsons</strong> <strong>and</strong> Colt business will extend <strong>WorleyParsons</strong>’ position as a tier 1 service provider to the global<br />
upstream <strong>and</strong> downstream hydrocarbons industry. Colt will benefit from the opportunity to leverage the global resources <strong>of</strong><br />
<strong>WorleyParsons</strong> to increase its capacity to execute projects in Canada, <strong>and</strong> to contribute to the growth <strong>of</strong> the Combined Group.<br />
5 Large project capability<br />
<strong>WorleyParsons</strong>’ systems <strong>and</strong> platforms will strengthen Colt’s ability to manage large EPCM projects for its North American<br />
customers. <strong>WorleyParsons</strong>’ global resources will be available to support Colt’s customers in the execution <strong>of</strong> oil s<strong>and</strong>s, heavy oil,<br />
pipeline, refining <strong>and</strong> upgrading projects.<br />
6 Opportunities for sector expansion<br />
<strong>WorleyParsons</strong> has a history <strong>of</strong> successfully integrating acquisitions to deliver material synergies over time. The acquisition <strong>of</strong><br />
Colt will allow <strong>WorleyParsons</strong> to better exp<strong>and</strong> its existing Canadian operations in the power, minerals <strong>and</strong> metals <strong>and</strong><br />
infrastructure sectors <strong>of</strong> Canada.<br />
7 Positive financial impact<br />
On a normalised pro forma basis, the Acquisition would have been 21.0% EPS accretive¹ (before synergies, amortisation <strong>and</strong><br />
additional corporate costs) for the 12 months ended 31 December 2006. Following <strong>com</strong>pletion <strong>of</strong> the transaction <strong>and</strong> the<br />
Entitlement Offer, <strong>WorleyParsons</strong> will continue to have a conservative financial pr<strong>of</strong>ile, with pro forma Gearing <strong>of</strong> 24.0% at<br />
31 December 2006.<br />
The Directors believe there is potential for material synergies for the Combined Group.<br />
Notes:<br />
1 The calculation <strong>of</strong> pro forma EPS accretion includes adjustment for the value <strong>of</strong> the renounced Entitlements <strong>of</strong> $7.00 per share determined by the<br />
Institutional Bookbuild.<br />
<strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong><br />
3
Colt is a key<br />
player in Canadian<br />
hydrocarbons<br />
Anchorage<br />
Oil S<strong>and</strong>s<br />
Region<br />
Edmonton<br />
Calgary<br />
Toronto<br />
80% <strong>of</strong> revenue from<br />
hydrocarbons<br />
Sarnia<br />
Strong <strong>and</strong> pr<strong>of</strong>itable growth<br />
Colt has delivered strong earnings growth over the<br />
last four years, achieving <strong>com</strong>pound annual Adjusted<br />
EBITDA growth <strong>of</strong> 47% between the years ended<br />
31 January 2004 <strong>and</strong> 31 January 2007 (estimated).<br />
A strong contract backlog gives <strong>WorleyParsons</strong><br />
confidence in Colt’s financial performance for the<br />
medium term.<br />
<br />
<br />
<br />
<br />
<br />
<br />
30 years <strong>of</strong> industry experience<br />
Over 4,600 employees<br />
Well balanced with five major industry alliances<br />
Four Canadian <strong>and</strong> one Alaskan <strong>of</strong>fice<br />
65% <strong>of</strong> services for brownfield facilities<br />
80% <strong>of</strong> revenue from top 10 customers<br />
4<br />
<strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong>
US imports <strong>of</strong> crude oil <strong>and</strong> petroleum by country <strong>of</strong> origin<br />
Canada is the largest supplier <strong>of</strong> crude oil <strong>and</strong> petroleum products to the US<br />
2,500<br />
Thous<strong>and</strong> barrels per day<br />
2,000<br />
1,500<br />
1,000<br />
500<br />
0<br />
Canada Mexico<br />
Saudi Venezuela Nigeria Iraq Algeria Angola Russia United<br />
Arabia<br />
Kingdom<br />
Crude oil<br />
Petroleum products<br />
Source: Canadian Association <strong>of</strong> Petroleum Producers, June 2006 report<br />
Virgin Ecuador Kuwait<br />
Isl<strong>and</strong>s<br />
Over 3,000<br />
oil s<strong>and</strong>s projects <strong>com</strong>pleted<br />
Colt is a leading project services firm to the Canadian <strong>and</strong><br />
Alaskan hydrocarbons industries, <strong>and</strong> a leader in project<br />
delivery for the heavy oil <strong>and</strong> oil s<strong>and</strong>s industries.<br />
Canada has the world’s second largest volume <strong>of</strong> oil<br />
reserves <strong>of</strong> which 97% are oil s<strong>and</strong>s. Oil production is<br />
expected to increase from 2.5 million barrels per day in<br />
2005 to four million barrels per day in 2012. Canadian oil<br />
is exported almost exclusively to the US, which imports<br />
more crude oil from Canada than any other country.<br />
Colt’s extensive experience ensures it is well positioned<br />
to take advantage <strong>of</strong> this rapidly growing market.<br />
90% <strong>of</strong> work is under<br />
cost-reimbursable contracts<br />
Experienced <strong>and</strong> <strong>com</strong>mitted management<br />
team with strong customer relationships<br />
Colt, which is currently wholly owned by current <strong>and</strong> former<br />
employees, is run by an experienced management team<br />
with long-st<strong>and</strong>ing customer relationships. Key<br />
management is <strong>com</strong>mitted, subject to Completion, to<br />
remain with <strong>WorleyParsons</strong> for at least three years <strong>and</strong><br />
on average are taking more than 30% <strong>of</strong> their<br />
consideration in <strong>WorleyParsons</strong> Exchangeable Shares,<br />
ensuring what is expected to be a strong alignment<br />
with <strong>WorleyParsons</strong>’ objectives for the Combined Group.<br />
<strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong><br />
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Combined Group’s<br />
extensive global<br />
hydrocarbons business<br />
97 <strong>of</strong>fices in 30 countries<br />
around the world<br />
<strong>WorleyParsons</strong> global hub<br />
<strong>WorleyParsons</strong> local <strong>of</strong>fice<br />
Colt local <strong>of</strong>fice<br />
Extensive global hydrocarbons business<br />
The <strong>com</strong>bined <strong>WorleyParsons</strong> <strong>and</strong> Colt business will extend <strong>WorleyParsons</strong>’ position as a tier 1 service provider to<br />
the global upstream <strong>and</strong> downstream hydrocarbons industry. Colt will benefit from the opportunity to leverage the<br />
global resources <strong>of</strong> <strong>WorleyParsons</strong> to increase its capacity to execute projects in Canada, <strong>and</strong> to contribute to the<br />
growth <strong>of</strong> the Combined Group.<br />
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<strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong>
Approximately<br />
20,400 employees<br />
Combined Group revenue by division 1 Combined Group revenue by geography 1<br />
Hydrocarbons 79%<br />
Europe 14%<br />
Minerals & Metals 6%<br />
Australia <strong>and</strong> New Zeal<strong>and</strong> 20%<br />
Infrastructure 4%<br />
Asia, the Middle East <strong>and</strong> Africa 16%<br />
Power 11%<br />
US <strong>and</strong> Latin America 21%<br />
Canada 29%<br />
Large project capability<br />
<strong>WorleyParsons</strong>’ systems, tools <strong>and</strong> platforms will strengthen Colt’s ability to manage large EPCM projects for its North<br />
American customers. <strong>WorleyParsons</strong>’ global resources will be available to support Colt’s customers in the execution <strong>of</strong><br />
oil s<strong>and</strong>s, heavy oil, pipeline, refining <strong>and</strong> upgrading projects.<br />
Notes:<br />
1 Includes <strong>WorleyParsons</strong> actual Aggregated Revenue for the year ended 30 June 2006 <strong>and</strong> Colt estimated revenue for year ended 31 January 2007.<br />
<strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong><br />
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Opportunities<br />
within Canada’s<br />
oil s<strong>and</strong>s<br />
Canada has the world’s<br />
second largest oil reserve –<br />
179 billion<br />
barrels including 174 billion in oil s<strong>and</strong>s<br />
C$125 billion in oil s<strong>and</strong>s capital<br />
expenditure for the next decade if all announced projects proceed<br />
Opportunities for sector expansion<br />
<strong>WorleyParsons</strong> has a history <strong>of</strong> successfully integrating acquisitions to deliver material synergies over time.<br />
The acquisition <strong>of</strong> Colt will allow <strong>WorleyParsons</strong> to better exp<strong>and</strong> its existing Canadian operations in the power,<br />
minerals <strong>and</strong> metals, <strong>and</strong> infrastructure sectors <strong>of</strong> Canada.<br />
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Positive financial impact<br />
On a normalised pro forma basis, the Acquisition would have<br />
been 21.0% EPS accretive (before synergies, amortisation<br />
<strong>and</strong> additional corporate costs) for the 12 months ended<br />
31 December 2006. Following <strong>com</strong>pletion <strong>of</strong> the<br />
transaction <strong>and</strong> the Entitlement Offer, <strong>WorleyParsons</strong><br />
will continue to have a conservative financial pr<strong>of</strong>ile, with<br />
pro forma Gearing <strong>of</strong> 24.0% at 31 December 2006. The<br />
Directors believe there is potential for material synergies<br />
for the Combined Group.<br />
Total Canadian oil production <strong>of</strong><br />
2.5 million<br />
barrels per day in 2005<br />
Potential risks<br />
Potential risks are set out in more detail in Section 8<br />
<strong>and</strong> include the following:<br />
… exposure to cyclical markets<br />
… increased exposure to energy price movements<br />
… difficulties in integrating Colt with <strong>WorleyParsons</strong>’<br />
existing Canadian operations or inability to retain<br />
key personnel<br />
… shortages <strong>of</strong> pr<strong>of</strong>essional personnel <strong>and</strong> skilled<br />
craft labour<br />
… changes in the current regulatory <strong>and</strong> fiscal regime<br />
for the Canadian energy industry<br />
… damage to <strong>WorleyParsons</strong>’ reputation through real<br />
or perceived project underperformance for an<br />
international customer<br />
<strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong><br />
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Financial highlights<br />
... <strong>WorleyParsons</strong> has entered into an agreement<br />
to purchase Colt for C$1,035 million<br />
(A$1,133 million)<br />
... the Purchase Price represents a multiple <strong>of</strong><br />
9.7 times Colt’s Pro forma EBITDA as estimated<br />
for the 12 months to 31 January 2007<br />
... the Acquisition will be funded by a mix <strong>of</strong><br />
equity <strong>and</strong> debt, as shown on the facing page<br />
... on a normalised pro forma basis, the Acquisition<br />
would have been approximately 21.0% EPS<br />
accretive (pre-synergies, amortisation <strong>and</strong><br />
additional corporate costs) for the 12 months<br />
to 31 December 2006<br />
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Pro forma capital structure<br />
As at 31 December 2006<br />
Gearing (net debt/net debt plus equity) 24.0%<br />
EBITDA interest cover<br />
15.7 times<br />
Acquisition pricing<br />
C$m<br />
Purchase Price 1,035<br />
Pro forma EBITDA as estimated for the 12 months to 31 January 2007 1 106<br />
Funding 2<br />
A$m<br />
Entitlement Offer 480<br />
Exchangeable Shares issued to Vendors 342<br />
Debt funding 333<br />
Total 1,155 3<br />
Notes:<br />
1 Pro forma EBITDA is described in Section 5.6.1.<br />
2 Converted to Australian dollars at one Australian dollar equals 0.913 Canadian dollars.<br />
3 Assumes A$22 million <strong>of</strong> transaction costs.<br />
<strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong><br />
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Summary <strong>of</strong> the Entitlement Offer <strong>and</strong> key dates<br />
Key Entitlement Offer statistics<br />
Application Price<br />
$21.00 per New Share<br />
Entitlement Offer ratio 1 New Share for every 9 Shares held at 7.00pm (AEST) on the Record Date<br />
New Shares<br />
$ million<br />
Institutional Entitlement Offer 16.2 million 339<br />
Retail Entitlement Offer 6.7 million 141<br />
Total Entitlement Offer 22.9 million 480<br />
Summary <strong>of</strong> key dates 1<br />
Lodgement <strong>of</strong> Document 14 February 2007<br />
Record Date for determining Entitlement to New Shares 14 February 2007<br />
Retail Entitlement Offer opens 19 February 2007<br />
Retail Entitlement Offer closes at 5.00pm (AEST) – closing date <strong>and</strong> date for<br />
acceptances <strong>and</strong> payment in full 2 March 2007<br />
Retail Bookbuild 8 March 2007<br />
Settlement <strong>of</strong> New Shares under Retail Entitlement Offer 14 March 2007<br />
Allotment <strong>of</strong> New Shares under Retail Entitlement Offer (Final Allotment Date) 15 March 2007<br />
Normal trading <strong>of</strong> New Shares 15 March 2007<br />
Dispatch <strong>of</strong> payments (if any) in respect <strong>of</strong> Entitlements not accepted 21 March 2007<br />
Extraordinary General <strong>Meeting</strong> 2 April 2007<br />
Notes:<br />
1 These dates are subject to change <strong>and</strong> are indicative only. <strong>WorleyParsons</strong>, in conjunction with the Underwriter, reserves the right to amend this<br />
indicative timetable including, subject to the Corporations Act <strong>and</strong> Listing Rules, to extend the latest date for receipt <strong>of</strong> Applications either generally<br />
or in particular cases or to cancel any part <strong>of</strong> the Entitlement Offer without prior notice.<br />
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What you should do<br />
If you are applying under the Entitlement Offer<br />
1 READ<br />
Read this Document in full, paying particular attention to the key investment risks on page 9 <strong>and</strong> other investment risks in<br />
Section 8.<br />
2 CONSIDER AND CONSULT<br />
Consider all risks <strong>and</strong> other information in light <strong>of</strong> your particular investment objectives <strong>and</strong> circumstances.<br />
Consult with your stockbroker, accountant or other pr<strong>of</strong>essional advisor if you are uncertain.<br />
3 COMPLETE<br />
If you decide to accept all or part <strong>of</strong> your Entitlement to take up New Shares, <strong>com</strong>plete <strong>and</strong> lodge the personalised Entitlement<br />
Form ac<strong>com</strong>panying this Document with the applicable Application Monies. For further details on how to apply for New Shares,<br />
see Section 1 <strong>and</strong> the guide to <strong>com</strong>pleting the Entitlement Form on the reverse side <strong>of</strong> the Entitlement Form.<br />
Questions relating to the Entitlement Offer can be directed to the <strong>WorleyParsons</strong> Entitlement Offer InfoLine<br />
on 1300 738 801 (Australia) or 61 3 9415 4601 (International), your stockbroker, accountant or other<br />
pr<strong>of</strong>essional advisor.<br />
If you are voting at the <strong>Meeting</strong><br />
1 READ<br />
Read this Document in full, paying particular attention to the <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong> in Section 10 which sets out the Resolutions<br />
upon which Shareholders are being asked to vote.<br />
Participation in the Entitlement Offer is not required in order for Shareholders to be entitled to vote.<br />
2 CONSIDER AND CONSULT<br />
Consider all risks <strong>and</strong> other information in light <strong>of</strong> your particular investment objectives <strong>and</strong> circumstances.<br />
Consult with your stockbroker, accountant or other pr<strong>of</strong>essional advisor if you are uncertain.<br />
3 VOTE ON THE RESOLUTIONS<br />
Vote:<br />
in person at the <strong>Meeting</strong> to be held on 2 April 2007; or<br />
if you are a corporate Shareholder, by corporate representative; or<br />
by proxy; or<br />
by attorney.<br />
You are encouraged to attend <strong>and</strong> vote at the <strong>Meeting</strong>.<br />
Details <strong>of</strong> the <strong>Meeting</strong> are as follows:<br />
Time: 2.00pm (AEST)<br />
Date: 2 April 2007<br />
Place: Radisson Plaza Hotel Sydney<br />
27 O’Connell Street<br />
Sydney NSW<br />
If you do not wish to attend the <strong>Meeting</strong>, you may <strong>com</strong>plete the Proxy Form enclosed.<br />
Details <strong>of</strong> how to <strong>com</strong>plete <strong>and</strong> submit the Proxy Form are contained in the <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong> in Section 10 <strong>and</strong> on the reverse<br />
side <strong>of</strong> the Proxy Form.<br />
If you have any questions about any aspects <strong>of</strong> the Resolutions or the <strong>Meeting</strong>, please consult the Share Registry<br />
on 1300 738 801 (Australia) or 61 3 9415 4601 (International) or consult your stockbroker, accountant or other<br />
pr<strong>of</strong>essional advisor.<br />
<strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong><br />
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Answers to key questions<br />
about the Entitlement Offer<br />
Refer to<br />
Section number<br />
What is the purpose <strong>of</strong> the Entitlement Offer?<br />
To partially fund the acquisition <strong>of</strong> Colt, announced on 8 February 2007 Section 1.2<br />
How else will the Acquisition be financed?<br />
The Acquisition will also be financed by the issue <strong>of</strong> Exchangeable Shares to the Vendors <strong>and</strong> new debt facilities Sections 1.2, 9.1 <strong>and</strong> 9.2<br />
How much will be raised through the Entitlement Offer?<br />
$480 million <strong>com</strong>prising an Institutional Entitlement Offer <strong>of</strong> $339 million <strong>and</strong> a Retail Entitlement Offer <strong>of</strong> $141 million Section 1<br />
What is the Application Price?<br />
$21.00 per New Share Section 1<br />
What is the Acquisition?<br />
The Acquisition is the acquisition <strong>of</strong> all the outst<strong>and</strong>ing partnership interests <strong>of</strong> Colt, a Canadian multi-disciplinary design<br />
<strong>and</strong> project services partnership Section 3<br />
How is the Entitlement Offer structured?<br />
The Entitlement Offer is a pro rata renounceable entitlement <strong>of</strong>fer to Qualifying Shareholders. The Entitlement Offer <strong>com</strong>prises<br />
the following steps:<br />
1 Institutional Entitlement Offer;<br />
2 Institutional Bookbuild <strong>of</strong> New Shares not taken up by Qualifying Institutional Shareholders;<br />
3 Retail Entitlement Offer; <strong>and</strong><br />
4 Retail Bookbuild <strong>of</strong> New Shares not taken up by Qualifying Retail Shareholders. Section 1.1<br />
Who is a Qualifying Retail Shareholder for the Entitlement Offer?<br />
Qualifying Retail Shareholders are those Qualifying Shareholders who:<br />
are registered as Shareholders as at 7.00pm (AEST) on 14 February 2007; <strong>and</strong><br />
are not Qualifying Institutional Shareholders (see Section 1.6). Section 1.3.1<br />
What is an Entitlement?<br />
Your Entitlement is the number <strong>of</strong> New Shares you are entitled to subscribe for under the Entitlement Offer.<br />
For every 9 Ordinary Shares you held at 7.00pm (AEST) on 14 February 2007, you are entitled to apply for 1 New Share.<br />
Your Entitlement is set out on the personalised Entitlement Form ac<strong>com</strong>panying this Document. Section 1.1<br />
What can I do with my Entitlement?<br />
There are a number <strong>of</strong> things you can do with your Entitlement. You can:<br />
1 accept your Entitlement in full;<br />
2 accept part <strong>of</strong> your Entitlement <strong>and</strong> not accept the balance; or<br />
3 not accept your Entitlement. Section 1.14<br />
What do I do if I want to accept my Entitlement?<br />
If you wish to accept all or any part <strong>of</strong> your Entitlement, you should:<br />
<strong>com</strong>plete the personalised Entitlement Form ac<strong>com</strong>panying this Document in accordance with the instructions set out on<br />
the form;<br />
attach payment for the full amount payable ($21.00 per New Share multiplied by the number <strong>of</strong> New Shares applied for) to the<br />
Entitlement Form; <strong>and</strong><br />
return the Entitlement Form to the Share Registry. Section 1.14.2<br />
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Refer to<br />
Section number<br />
What do I do if I do not want to accept any <strong>of</strong> my Entitlement?<br />
If you do not wish to accept any part <strong>of</strong> your Entitlement, you should do nothing. If you do nothing, New Shares <strong>of</strong> an equivalent<br />
number to the New Shares represented by your Entitlement will be <strong>of</strong>fered for subscription under the Retail Bookbuild (described in<br />
Section 1.3.4). You may receive some cash with respect to this rejected Entitlement or you may receive nothing.<br />
If you do not accept any part <strong>of</strong> your Entitlement, you will continue to own your existing Shares. However, your percentage<br />
shareholding in <strong>WorleyParsons</strong> will be reduced following the issue <strong>of</strong> all <strong>of</strong> the New Shares under the Entitlement Offer. Section 1.14.3<br />
What are the significant benefits <strong>of</strong> the Acquisition?<br />
Colt has delivered strong <strong>and</strong> pr<strong>of</strong>itable growth which is expected to continue<br />
Colt has an experienced management team who, subject to Completion, are <strong>com</strong>mitted to remain with <strong>WorleyParsons</strong> for<br />
at least three years<br />
The <strong>com</strong>bined <strong>WorleyParsons</strong> <strong>and</strong> Colt business will extend <strong>WorleyParsons</strong>’ position as a tier 1 service provider to the global<br />
upstream <strong>and</strong> downstream hydrocarbons industry<br />
The Acquisition provides an opportunity to use the global resources <strong>of</strong> <strong>WorleyParsons</strong> to increase Colt’s capacity to execute<br />
projects in Canada<br />
The Acquisition provides a significant opportunity in oil s<strong>and</strong>s, a rapidly growing industry in Canada<br />
On a normalised pro forma basis, the Acquisition would have been 21.0% EPS accretive (pre-synergies, amortisation <strong>and</strong><br />
additional corporate costs) for <strong>WorleyParsons</strong> for the 12 months to 31 December 2006. Sections 3 <strong>and</strong> 5<br />
What are the significant risks associated with an investment in Ordinary Shares?<br />
Potential risks are set out in more detail in Section 8 <strong>and</strong> include the following:<br />
exposure to cyclical markets;<br />
increased exposure to energy price movements;<br />
difficulties in integrating Colt with <strong>WorleyParsons</strong>’ existing Canadian operations or inability to retain key personnel;<br />
shortages <strong>of</strong> pr<strong>of</strong>essional personnel <strong>and</strong> skilled craft labour;<br />
changes in the current regulatory <strong>and</strong> fiscal regime for the Canadian energy industry; <strong>and</strong><br />
damage to <strong>WorleyParsons</strong>’ reputation through real or perceived project underperformance for an international customer. Section 8<br />
Will New Shares issued under the Entitlement Offer be entitled to receive the interim dividend<br />
for the half year ended 31 December 2006?<br />
No, New Shares issued under the Entitlement Offer will not be entitled to the interim dividend <strong>of</strong> 28 cents per Share for the<br />
half year ended 31 December 2006. Section 1.1.2<br />
Is the Entitlement Offer underwritten?<br />
Yes. The Entitlement Offer has been fully underwritten by UBS. Sections 1.1.3 <strong>and</strong> 9.4<br />
What are Exchangeable Shares?<br />
Exchangeable Shares are being issued to the Vendors as partial consideration for the Acquisition. While issued by a<br />
<strong>WorleyParsons</strong> Canadian Subsidiary rather than <strong>WorleyParsons</strong> itself, holders can exchange them into Ordinary Shares<br />
at any time (subject to the escrow arrangements described in Section 9.3.2). The Exchangeable Shares (through a voting trust<br />
which will hold a Special Voting Share in <strong>WorleyParsons</strong>) will also entitle their holders to vote at <strong>WorleyParsons</strong>’ general meetings<br />
as though they hold Ordinary Shares, subject to approval <strong>of</strong> Shareholders at the <strong>Meeting</strong>. They are intended to be the economic<br />
equivalent <strong>of</strong> a holding <strong>of</strong> Ordinary Shares. Section 9.1<br />
Will the Exchangeable Shares issued be entitled to receive the interim dividend for the<br />
half year ended 31 December 2006?<br />
No. Section 9.1.2<br />
At what price will the Exchangeable Shares be issued?<br />
The Exchangeable Shares will be issued at the Institutional Bookbuild Price ($28.00). Section 9.1<br />
How can further information be obtained?<br />
By contacting your stockbroker, accountant or other pr<strong>of</strong>essional advisor.<br />
By calling the <strong>WorleyParsons</strong> Entitlement Offer InfoLine on 1300 738 801 (Australia) or 61 3 9415 4601 (International).<br />
<strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong> 15
Answers to key questions<br />
Section about the Heading <strong>Meeting</strong> Here<br />
Refer to<br />
Section number<br />
Why is <strong>WorleyParsons</strong> holding a <strong>Meeting</strong>?<br />
Shareholder approval is not needed to <strong>com</strong>plete the Acquisition. The Board has called an Extraordinary General <strong>Meeting</strong> to seek<br />
Shareholder approval for the issue <strong>of</strong> the Special Voting Share <strong>and</strong> to maintain <strong>WorleyParsons</strong>’ capacity to issue further capital. Section 10<br />
Why has this Document been sent to you?<br />
If you are a Shareholder, this Document has been sent to you to provide you with the information relevant to your consideration<br />
<strong>of</strong> the Resolutions to be put at the <strong>Meeting</strong> (as well as containing the Entitlement Offer to Qualifying Retail Shareholders). Section 10<br />
What are Shareholders being asked to approve?<br />
Shareholders are being asked to approve the issue <strong>of</strong> the Special Voting Share, <strong>and</strong> to maintain <strong>WorleyParsons</strong>’ capacity to<br />
issue further capital by approving <strong>and</strong> ratifying the issue <strong>of</strong> Exchangeable Shares (<strong>and</strong> associated exchange rights <strong>and</strong><br />
obligations) <strong>and</strong> Ordinary Shares under the Caravel Offer, in connection with the Acquisition. Section 10<br />
What are the Resolutions?<br />
The Resolutions are contained in the <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong> in Section 10. Section 10<br />
What are the re<strong>com</strong>mendations <strong>of</strong> the Directors?<br />
The Directors unanimously re<strong>com</strong>mend that you vote in favour <strong>of</strong> the Resolutions. The Directors intend to vote the Shares<br />
they control in favour <strong>of</strong> the Resolutions. The Directors <strong>and</strong> certain senior managers <strong>of</strong> <strong>WorleyParsons</strong> who are also<br />
Shareholders have confirmed their intention to vote all <strong>and</strong> any Ordinary Shares they control in favour <strong>of</strong> the resolution<br />
approving the issue <strong>of</strong> the Special Voting Share. Section 10<br />
How can you vote?<br />
You can vote at the <strong>Meeting</strong>:<br />
in person;<br />
if you are a corporate Shareholder, by corporate representative;<br />
by proxy; or<br />
by attorney.<br />
If you wish to vote in person, you should attend the <strong>Meeting</strong>.<br />
If you wish to vote by proxy at the <strong>Meeting</strong>, you will need to <strong>com</strong>plete <strong>and</strong> sign the Proxy Form ac<strong>com</strong>panying this Document.<br />
Details <strong>of</strong> how to <strong>com</strong>plete <strong>and</strong> submit the Proxy Form are contained in the <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong> in Section 10 <strong>and</strong> on the reverse<br />
side <strong>of</strong> the Proxy Form. Section 10<br />
You are encouraged to attend <strong>and</strong> vote at the <strong>Meeting</strong>.<br />
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Section 1<br />
Details <strong>of</strong> the<br />
Entitlement Offer<br />
<strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong><br />
17
Section 1 Details <strong>of</strong> the Entitlement Offer<br />
1.1 Overview <strong>of</strong> the Entitlement Offer<br />
The Entitlement Offer is an <strong>of</strong>fer <strong>of</strong> approximately 22.9 million New Shares at the Application Price <strong>of</strong> $21.00 per New Share.<br />
The <strong>of</strong>fer is a pro rata renounceable entitlement <strong>of</strong>fer. Each Qualifying Shareholder is entitled to subscribe for 1 New Share for<br />
every 9 Ordinary Shares held at 7.00pm (AEST) on the Record Date.<br />
1.1.1 The <strong>of</strong>fer structure<br />
The Entitlement Offer structure consists <strong>of</strong> the following:<br />
... Institutional Entitlement Offer – <strong>of</strong>fers are made to Qualifying Institutional Shareholders to take up or sell their Entitlement.<br />
The Institutional Entitlement Offer closed on 9 February 2007;<br />
... Institutional Bookbuild – New Shares <strong>of</strong> an equivalent number to the New Shares not taken up by Qualifying Institutional<br />
Shareholders under the Institutional Entitlement Offer are <strong>of</strong>fered for subscription to Institutional Investors. The<br />
Institutional Bookbuild was conducted on 13 February 2007;<br />
... Retail Entitlement Offer – Qualifying Retail Shareholders are sent this <strong>Prospectus</strong> <strong>and</strong> required to decide whether to take up<br />
or sell their Entitlement. The Retail Entitlement Offer closes on 2 March 2007; <strong>and</strong><br />
... Retail Bookbuild – New Shares <strong>of</strong> an equivalent number to the New Shares not taken up by Qualifying Retail Shareholders<br />
under the Retail Entitlement Offer are <strong>of</strong>fered for subscription to Institutional Investors. The Retail Bookbuild is expected to<br />
be conducted on 8 March 2007.<br />
1.1.2 No entitlement to interim dividend<br />
New Shares issued under the Entitlement Offer will not be entitled to the interim dividend for the half year ended<br />
31 December 2006. New Shares issued pursuant to this <strong>Prospectus</strong> will rank equally in all other respects with existing Ordinary<br />
Shares from the date <strong>of</strong> allotment, including New Shares issued under the Institutional Entitlement Offer.<br />
1.1.3 Underwriting <strong>of</strong> the Entitlement Offer<br />
The Entitlement Offer has been fully underwritten by UBS.<br />
1.2 Purpose <strong>of</strong> the Entitlement Offer<br />
The purpose <strong>of</strong> the Entitlement Offer is to raise approximately $480 million to partly fund the acquisition <strong>of</strong> Colt. The<br />
remainder <strong>of</strong> the Purchase Price will be funded by the issue <strong>of</strong> Exchangeable Shares to the Vendors <strong>and</strong> bank loans.<br />
Sources <strong>and</strong> applications <strong>of</strong> funds<br />
Sources <strong>of</strong> funds<br />
Entitlement Offer 480<br />
Exchangeable Shares issued to Vendors 342<br />
Debt funding 333<br />
Total 1,155<br />
Application <strong>of</strong> funds<br />
Purchase Price 1,133<br />
Acquisition <strong>and</strong> funding costs 22<br />
Total 1,155<br />
Notes:<br />
1 Assumed exchange rate <strong>of</strong> one Australian dollar equals 0.913 Canadian dollars.<br />
Details <strong>of</strong> the Exchangeable Shares <strong>and</strong> debt funding are provided in Sections 9.1 <strong>and</strong> 9.2.<br />
A$m 1<br />
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1.3 The Retail Entitlement Offer<br />
This <strong>Prospectus</strong> relates to the Retail Entitlement Offer only. The Retail Entitlement Offer is an <strong>of</strong>fer to Qualifying Retail<br />
Shareholders <strong>of</strong> approximately 6.7 million New Shares at a price <strong>of</strong> $21.00 per New Share (the Application Price).<br />
1.3.1 Who are Qualifying Retail Shareholders?<br />
Qualifying Retail Shareholders are those Qualifying Shareholders who:<br />
... are registered as Shareholders at 7.00pm (AEST) on 14 February 2007 (the Record Date); <strong>and</strong><br />
... are not Qualifying Institutional Shareholders (see Section 1.6).<br />
1.3.2 Applications under the Retail Entitlement Offer<br />
Qualifying Retail Shareholders are entitled to apply for 1 New Share for every 9 Ordinary Shares held at 7.00pm on the Record<br />
Date. The amount <strong>of</strong> your Entitlement is shown on the personalised Entitlement Form ac<strong>com</strong>panying this Document.<br />
Qualifying Retail Shareholders may apply for all <strong>of</strong> their Entitlement, part <strong>of</strong> their Entitlement or none <strong>of</strong> their Entitlement.<br />
1.3.3 Allotment <strong>of</strong> New Shares<br />
New Shares under the Retail Entitlement Offer are expected to be allotted on 15 March 2007 (the Final Allotment Date).<br />
No certificates will be issued in respect <strong>of</strong> the New Shares. Following allotment, Shareholders will receive a Holding Statement<br />
which sets out the number <strong>of</strong> New Shares allotted to them.<br />
Applicants may call the Share Registry on 1300 738 801 (Australia) or 61 3 9415 4601 (International) between 8.30am <strong>and</strong><br />
5.00pm (AEST) Monday to Friday from 15 March 2007 to seek confirmation <strong>of</strong> their allocation.<br />
1.3.4 The Retail Bookbuild<br />
The Retail Bookbuild will be conducted by the Underwriter on 8 March 2007. Institutional Investors will be entitled to<br />
participate in the Retail Bookbuild. They will be invited to bid for New Shares <strong>of</strong> an equivalent number to New Shares not taken<br />
up by Qualifying Retail Shareholders through their Entitlements.<br />
1.3.4.1 Clearing Price<br />
The Clearing Price under the Retail Bookbuild may be equal to, above or below the Application Price.<br />
If the Clearing Price <strong>of</strong> the Retail Bookbuild is equal to or below the Application Price:<br />
... <strong>WorleyParsons</strong> will receive the Application Price in respect <strong>of</strong> all New Shares sold through the Retail Bookbuild; <strong>and</strong><br />
... no cash will be payable to any Qualifying Retail Shareholders.<br />
If the Clearing Price <strong>of</strong> the Retail Bookbuild exceeds the Application Price:<br />
... <strong>WorleyParsons</strong> will receive the Application Price in respect <strong>of</strong> all New Shares sold through the Retail Bookbuild; <strong>and</strong><br />
... the cash excess <strong>of</strong> the Clearing Price over the Application Price (the Retail Premium) will be paid pro rata to each Qualifying<br />
Retail Shareholder who did not accept their Entitlement in full (with respect to the part <strong>of</strong> the Entitlement they did not<br />
accept only).<br />
If the Underwriter is unable to obtain any Retail Premium for New Shares sold under the Retail Bookbuild, Qualifying Retail<br />
Shareholders renouncing some <strong>of</strong> their Entitlements will not receive any cash for their renounced Entitlements.<br />
The ability to sell New Shares under the Retail Bookbuild <strong>and</strong> the ability to obtain any Retail Premium will be dependent upon<br />
various factors, including market conditions. The fact that the Institutional Premium was $7.00 per New Share is not an<br />
indication that there will be a Retail Premium or what the Retail Premium may be. To the maximum extent permitted by law,<br />
none <strong>of</strong> <strong>WorleyParsons</strong> nor the Underwriter, nor their respective Related Bodies Corporate, nor the directors, <strong>of</strong>ficers,<br />
employees, agents or advisors <strong>of</strong> any <strong>of</strong> them, will be liable, including for negligence, for any failure to procure applications<br />
under the Retail Bookbuild at a price in excess <strong>of</strong> the Application Price.<br />
1.4 Institutional Entitlement Offer<br />
The Institutional Entitlement Offer was conducted by the Underwriter between 8 February 2007 <strong>and</strong> 9 February 2007.<br />
Qualifying Institutional Shareholders were <strong>of</strong>fered the opportunity to subscribe for 1 New Share for every 9 Ordinary Shares<br />
held at the Record Date.<br />
A total <strong>of</strong> 11.6 million New Shares were allocated to Qualifying Institutional Shareholders under the Institutional Entitlement<br />
Offer to raise $242.6 million. Allotment <strong>of</strong> New Shares under the Institutional Entitlement Offer is expected to occur on 21<br />
February 2007 (the Institutional Allotment Date).<br />
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Section 1 Details <strong>of</strong> the Entitlement Offer continued<br />
1.5 The Institutional Bookbuild<br />
The Institutional Bookbuild was conducted on 13 February 2007. Institutional Investors who took up all <strong>of</strong> their Entitlement<br />
under the Institutional Entitlement Offer <strong>and</strong> other Institutional Investors were entitled to participate in the Institutional<br />
Bookbuild.<br />
The price achieved under the Institutional Bookbuild was $28.00 per New Share (the Institutional Bookbuild Price), which<br />
represents a $7.00 Premium to the Application Price. That premium will be paid to Qualifying Institutional Shareholders who did<br />
not accept their full Entitlement in proportion to the number <strong>of</strong> New Shares <strong>of</strong> their Entitlement sold under the Institutional<br />
Bookbuild.<br />
A total <strong>of</strong> approximately 4.6 million New Shares were allocated to Institutional Investors under the Institutional Bookbuild to<br />
raise approximatley $96 million for <strong>WorleyParsons</strong> (excluding the Institutional Premium to be paid to renouncing Institutional<br />
Shareholders for renounced Entitlements). Allotment <strong>of</strong> the New Shares under the Institutional Bookbuild is expected to occur<br />
on 21 February 2007.<br />
1.6 No <strong>of</strong>fer under Retail Entitlement Offer to participants in the Institutional<br />
Entitlement Offer<br />
The Retail Entitlement Offer does not constitute an <strong>of</strong>fer to any Qualifying Institutional Shareholders. A Qualifying<br />
Institutional Shareholder is:<br />
... any Institutional Shareholder which received an Institutional Entitlement Offer (whether or not it accepted that <strong>of</strong>fer); or<br />
... a nominee for such an Institutional Shareholder, in respect <strong>of</strong> Ordinary Shares held for such Institutional Shareholder.<br />
1.7 No <strong>of</strong>fer under Retail Entitlement Offer to holders <strong>of</strong> New Shares<br />
Any person allocated New Shares under the Institutional Entitlement Offer or Institutional Bookbuild does not have any<br />
entitlement to participate in the Retail Entitlement Offer in respect <strong>of</strong> those New Shares.<br />
1.8 Shareholders outside Australia <strong>and</strong> New Zeal<strong>and</strong><br />
Shareholders outside Australia <strong>and</strong> New Zeal<strong>and</strong> who are not <strong>of</strong>fered an Entitlement will be treated as receiving <strong>and</strong><br />
renouncing an Entitlement <strong>and</strong> will receive the Retail Premium (if any) in respect <strong>of</strong> all <strong>of</strong> that deemed Entitlement.<br />
1.9 Top-Up Shares<br />
The Entitlement Offer is a <strong>com</strong>plex process <strong>and</strong> in some instances investors may believe that they will own more Shares on<br />
the Record Date than they actually will. This results in reconciliation issues. If reconciliation issues occur, it is possible that<br />
<strong>WorleyParsons</strong> may need to issue a small quantity <strong>of</strong> additional New Shares (the Top-Up Shares) to ensure all Qualifying<br />
Shareholders receive their full Entitlement.<br />
The price at which these Top-Up Shares will be issued is not known but will be no lower than the Application Price.<br />
<strong>WorleyParsons</strong> also reserves the right to reduce the number <strong>of</strong> New Shares or the amount <strong>of</strong> the Institutional Premium or<br />
Retail Premium allocated to Qualifying Shareholders, or persons claiming to be Qualifying Shareholders, if their claims prove to<br />
be overstated or if they or their nominees fail to provide information requested to substantiate their claims.<br />
Any Top-Up Shares (<strong>and</strong> New Shares issued under the Retail Bookbuild) will be issued under this <strong>Prospectus</strong> <strong>and</strong> accordingly<br />
(without limiting other provisions <strong>of</strong> this <strong>Prospectus</strong> permitting variation <strong>of</strong> dates or acceptance <strong>of</strong> late Applications), the<br />
<strong>of</strong>fers made in this <strong>Prospectus</strong> remain open for acceptance in respect <strong>of</strong> such Shares until the Final Allotment Date.<br />
1.10 ASX quotation<br />
Application for quotation <strong>of</strong> the New Shares on ASX will be made no later than seven days after the date <strong>of</strong> this Document.<br />
If such application is not made, or if permission for quotation <strong>of</strong> New Shares is not granted by ASX within three months after<br />
the date <strong>of</strong> this <strong>Prospectus</strong>, or any longer period permitted by law, Application Monies will be refunded without interest.<br />
Subject to approval being granted, trading <strong>of</strong> the New Shares is expected to <strong>com</strong>mence on a normal settlement basis within<br />
three Business Days <strong>of</strong> the relevant Allotment Date.<br />
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1.11 Restrictions on the Entitlement Offer in jurisdictions outside Australia<br />
This <strong>Prospectus</strong> does not constitute an <strong>of</strong>fer or invitation to subscribe for New Shares in any jurisdiction in which, or to any<br />
person to whom, it would not be lawful to make such an <strong>of</strong>fer or invitation or issue this <strong>Prospectus</strong>. It is the responsibility <strong>of</strong><br />
any Applicant outside Australia to ensure <strong>com</strong>pliance with the laws <strong>of</strong> any country relevant to their Application.<br />
No action has been taken to register or qualify the Entitlement Offer in any jurisdiction outside Australia.<br />
The distribution <strong>of</strong> this <strong>Prospectus</strong> in jurisdictions outside Australia may be restricted by law <strong>and</strong> persons who <strong>com</strong>e into<br />
possession <strong>of</strong> it should seek advice on <strong>and</strong> observe any such restrictions. Any failure to <strong>com</strong>ply with such restrictions may<br />
constitute a violation <strong>of</strong> applicable securities laws.<br />
The Retail Entitlement Offer is not open to persons with registered addresses outside Australia <strong>and</strong> New Zeal<strong>and</strong> unless<br />
<strong>WorleyParsons</strong> otherwise permits.<br />
New Zeal<strong>and</strong><br />
This <strong>Prospectus</strong> has not been registered in New Zeal<strong>and</strong> under or in accordance with the Securities Act 1978 (New Zeal<strong>and</strong>).<br />
However, existing Shareholders with an address in New Zeal<strong>and</strong> are permitted to take up their Entitlement.<br />
1.12 Other jurisdictions<br />
New Shares may not be <strong>of</strong>fered, sold or distributed in any other jurisdiction by means <strong>of</strong> this <strong>Prospectus</strong> or otherwise, except to<br />
persons to whom such <strong>of</strong>fer, sale or distribution is permitted under applicable law.<br />
1.13 Offer <strong>of</strong> Shares to Caravel Shareholders<br />
Caravel Investments Ltd (Caravel) was established by Colt as part <strong>of</strong> its retention <strong>and</strong> development strategy for key<br />
management who had not reached the level <strong>of</strong> Partner. Pursuant to a royalty agreement, Colt paid approximately 8.5% <strong>of</strong> Colt’s<br />
pr<strong>of</strong>it to Caravel for distribution among its 277 shareholders. As part <strong>of</strong> the acquisition <strong>of</strong> Colt, the Vendors are seeking to<br />
acquire Caravel, <strong>and</strong> Colt’s obligations under the royalty agreement will be assigned to the Vendors <strong>and</strong> terminated.<br />
Upon Completion, <strong>WorleyParsons</strong> will <strong>of</strong>fer the Employees <strong>of</strong> Colt who were previously Caravel Shareholders the opportunity<br />
to invest in <strong>WorleyParsons</strong>. <strong>WorleyParsons</strong> will <strong>of</strong>fer to issue up to $10 million worth <strong>of</strong> New Shares to such Caravel<br />
Shareholders at the Institutional Bookbuild Price (the Caravel Offer). The <strong>of</strong>fer to the Caravel Shareholders is not underwritten<br />
<strong>and</strong> if there is insufficient dem<strong>and</strong>, a lesser dollar amount <strong>of</strong> New Shares will be issued.<br />
Applications for the Caravel Offer must be lodged with <strong>WorleyParsons</strong> within five Business Days after the Completion Date <strong>and</strong><br />
New Shares will be allotted shortly thereafter. New Shares <strong>of</strong>fered under the Caravel Offer will not be escrowed.<br />
1.14 Actions required by Qualifying Retail Shareholders<br />
1.14.1 How can Qualifying Retail Shareholders apply for New Shares?<br />
Qualifying Retail Shareholders are entitled to the number <strong>of</strong> New Shares on their Entitlement Form which is attached to this<br />
Document. The Entitlement is based on their shareholding at the Record Date. In calculating Entitlements, fractional<br />
entitlements have been rounded up to the nearest whole number.<br />
To apply for your Entitlement, Qualifying Retail Shareholders should <strong>com</strong>plete the personalised loose leaf Entitlement Form<br />
ac<strong>com</strong>panying this Document in accordance with the instructions on the reverse side <strong>of</strong> the Entitlement Form. If you are a<br />
Qualifying Retail Shareholder, you can choose to:<br />
... accept your Entitlement in full;<br />
... accept part <strong>of</strong> your Entitlement <strong>and</strong> not accept the balance; or<br />
... not accept your Entitlement.<br />
All Qualifying Retail Shareholders who apply will receive their Entitlement.<br />
1.14.2 How to accept your Entitlement <strong>and</strong> make payment<br />
If you want to accept part <strong>of</strong> or all <strong>of</strong> your Entitlement:<br />
... <strong>com</strong>plete the personalised loose leaf Entitlement Form ac<strong>com</strong>panying this Document in accordance with the instructions set<br />
out on the form;<br />
... include with your Entitlement Form a cheque or bank draft (the amount calculated by multiplying the number <strong>of</strong> New Shares<br />
you applied for by the Application Price). If you do not indicate the number <strong>of</strong> New Shares for which you wish to subscribe,<br />
or there is a discrepancy between the amount <strong>of</strong> the cheque or bank draft <strong>and</strong> the number <strong>of</strong> New Shares indicated,<br />
<strong>WorleyParsons</strong> will treat you as applying for as many New Shares as your cheque or bank draft will pay for; <strong>and</strong><br />
... return the Entitlement Form to the Share Registry at the following address:<br />
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Section 1 Details <strong>of</strong> the Entitlement Offer continued<br />
BY HAND<br />
BY MAIL<br />
Computershare Investor Services Pty Limited<br />
Computershare Investor Services Pty Limited<br />
Level 3 GPO Box 253<br />
60 Carrington Street Sydney NSW 2001<br />
Sydney NSW 2000<br />
Australia<br />
Australia<br />
Payment will only be accepted in Australian currency <strong>and</strong> cheques <strong>and</strong> bank drafts must be drawn on or payable at an<br />
Australian bank.<br />
Cheques <strong>and</strong> bank drafts should be made payable to “<strong>WorleyParsons</strong> Limited – Entitlement Offer Applications Account No 2”<br />
<strong>and</strong> crossed “Not Negotiable”. Please do not send cash. Receipts for payment will not be issued.<br />
1.14.3 What to do if you do not wish to accept any <strong>of</strong> your Entitlement<br />
If you do not wish to accept any part <strong>of</strong> your Entitlement, you should do nothing.<br />
1.14.4 Closing Date for Applications<br />
The closing time <strong>and</strong> date for receiving Applications under the Retail Entitlement Offer is 5.00pm (AEST) on 2 March 2007 (or<br />
as varied). The Entitlement Forms must be received by the Share Registry by this time, even if lodged through a stockbroker or<br />
advisor. Entitlement Forms must be <strong>com</strong>pleted in accordance with the instructions outlined on the Entitlement Form.<br />
1.14.5 Application Monies <strong>and</strong> interest<br />
Monies received from an Applicant for an Application will, until those New Shares are issued, be held by <strong>WorleyParsons</strong> in a<br />
trust account. If you are allotted less than the number <strong>of</strong> New Shares you applied for, you will receive a refund cheque for the<br />
relevant amount <strong>of</strong> Application Monies (without interest) not applied towards the issue <strong>of</strong> New Shares, as soon as practicable<br />
after the Closing Date.<br />
Subject to the Corporations Act <strong>and</strong> Listing Rules, <strong>WorleyParsons</strong> reserves the right to cancel any part <strong>of</strong> the Entitlement Offer<br />
at any time, in which case all Application Monies for New Shares which have not been issued will be refunded without interest.<br />
To the fullest extent permitted by law, each Applicant agrees that such Application Monies shall not bear or earn interest for<br />
the Applicant, irrespective <strong>of</strong> whether or not all or any <strong>of</strong> the New Shares applied for by the Applicant are issued to the<br />
Applicant, <strong>and</strong> that any interest earned on Application Monies held by <strong>WorleyParsons</strong> shall be the property <strong>of</strong> <strong>WorleyParsons</strong>.<br />
1.14.6 Shareholder enquiries<br />
This Document is important <strong>and</strong> requires your immediate attention. It should be read in its entirety. If you are in doubt as to the<br />
course you should follow, you should consult your stockbroker, accountant or other pr<strong>of</strong>essional advisor.<br />
Questions relating to the Entitlement Offer can be directed to the <strong>WorleyParsons</strong> Entitlement Offer InfoLine on 1300 738 801<br />
(Australia) or 61 3 9415 4601 (International), your stockbroker or pr<strong>of</strong>essional advisor.<br />
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Section 2<br />
<strong>WorleyParsons</strong>’<br />
existing business<br />
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Section 2 <strong>WorleyParsons</strong>’ existing business<br />
2.1 Overview<br />
<strong>WorleyParsons</strong> is a leading provider <strong>of</strong> pr<strong>of</strong>essional services to the energy, resource <strong>and</strong> <strong>com</strong>plex process industries. It <strong>of</strong>fers a<br />
broad scope <strong>of</strong> services across the full spectrum <strong>of</strong> an asset’s lifecycle, providing design <strong>and</strong> project services for evaluating the<br />
feasibility <strong>of</strong> new developments, creation <strong>of</strong> the asset <strong>and</strong> support to maximise the returns from the asset over its operating life.<br />
Through wholly-owned operations <strong>and</strong> joint ventures, <strong>WorleyParsons</strong> currently employs approximately 15,800 people in<br />
30 countries <strong>and</strong> 95 <strong>of</strong>fices worldwide (excluding Colt). For the year ended 30 June 2006, 64% <strong>of</strong> pr<strong>of</strong>it before tax was<br />
derived from operations outside Australia <strong>and</strong> this is expected to grow in future years, particularly with the acquisition <strong>of</strong> Colt.<br />
<strong>WorleyParsons</strong>’ current locations are set out in the diagram below:<br />
Diagram 3 <strong>WorleyParsons</strong> locations<br />
Canada<br />
Fort McMurray<br />
Fort St. John<br />
Gr<strong>and</strong>e Prairie Cold Lake<br />
Edmonton Lloydminster<br />
Victoria Vancouver Saskatoon<br />
Nanaimo Calgary<br />
Toronto<br />
United States<br />
Chicago<br />
Sacramento<br />
Denver<br />
Martinez<br />
Reading<br />
Los Angeles<br />
Dallas<br />
Arcadia<br />
Chattanooga<br />
Monrovia<br />
Deer Park Houston<br />
Trinidad & Tobago Port <strong>of</strong> Spain<br />
United Kingdom<br />
Leeds<br />
Irel<strong>and</strong> Dublin<br />
London<br />
Bristol<br />
Spain Madrid<br />
Nigeria Lagos<br />
Bulgaria S<strong>of</strong>ia<br />
Egypt Cairo<br />
Egypt Giza<br />
Saudi Arabia<br />
Saudi Arabia Yanbu<br />
Russia Moscow<br />
Kazakhstan Atyrau<br />
Iraq<br />
Kuwait<br />
Al Khobar<br />
Qatar Doha<br />
Ahmadi<br />
UAE Abu Dhabi<br />
Oman Muscat<br />
India Mumbai<br />
Thail<strong>and</strong> Bangkok<br />
Thail<strong>and</strong> Sriracha<br />
Malaysia Kerteh<br />
Malaysia Kuala Lumpur<br />
Singapore<br />
China Beijing<br />
China Tianjin<br />
China Shanghai<br />
Philippines Manila<br />
Malaysia Kuantan<br />
Brunei Kuala Belait<br />
Malaysia Miri<br />
Angola Lu<strong>and</strong>a<br />
Indonesia Jakarta<br />
Darwin<br />
Chile Santiago<br />
Townsville<br />
Karratha<br />
Mackay<br />
Australia<br />
Gladstone<br />
Kalgoorlie<br />
Brisbane<br />
Perth<br />
Singleton Newcastle<br />
Kwinana Adelaide<br />
Sydney<br />
Bunbury<br />
Whangarei<br />
Spotswood Melbourne<br />
Auckl<strong>and</strong><br />
Geelong New Plymouth Hastings<br />
Bell Bay<br />
Nelson<br />
Christchurch<br />
New Zeal<strong>and</strong><br />
<strong>WorleyParsons</strong>’ divisional structure is set out in Diagram 4 below:<br />
Diagram 4 <strong>WorleyParsons</strong> divisional structure<br />
<strong>WorleyParsons</strong><br />
Hydrocarbons Power Minerals & Metals<br />
Infrastructure<br />
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The charts below show the spread <strong>of</strong> revenue among <strong>WorleyParsons</strong>’ geographic locations <strong>and</strong> business divisions.<br />
Chart 5 Aggregated Revenue 1 by geography for<br />
Chart 6 Aggregated Revenue 1 by segment for<br />
the year ended 30 June 2006 the year ended 30 June 2006<br />
Europe 18%<br />
Australia <strong>and</strong> New Zeal<strong>and</strong> 27%<br />
Asia, the Middle East <strong>and</strong> Africa 22%<br />
Americas 33%<br />
Hydrocarbons 72%<br />
Power 15%<br />
Minerals & Metals 8%<br />
Infrastructure 5%<br />
Notes:<br />
1 Aggregated Revenue includes revenue from associates <strong>and</strong> excludes pass through procurement services for nil margin.<br />
2.2 Hydrocarbons<br />
<strong>WorleyParsons</strong>’ Hydrocarbons group services the oil <strong>and</strong> gas industry (upstream hydrocarbons) <strong>and</strong> the refining <strong>and</strong><br />
petrochemical industry (downstream hydrocarbons). For the year ended 30 June 2006, the Hydrocarbons group accounted for<br />
72% <strong>of</strong> Aggregated Revenue <strong>and</strong> 65% <strong>of</strong> EBIT.<br />
<strong>WorleyParsons</strong> works with most <strong>of</strong> the major international oil <strong>com</strong>panies (IOCs) including BP, Chevron, ConocoPhillips, Exxon<br />
Mobil, Shell <strong>and</strong> Total. It also has a strong track record <strong>of</strong> working with the large national oil <strong>com</strong>panies (NOCs) including Abu<br />
Dhabi National Oil Company, China National Offshore Oil Corporation, Kuwait Oil Company, National Iranian Oil Company,<br />
Pertamina (Indonesia), Petronas (Malaysia), Qatar Petroleum <strong>and</strong> Saudi Aramco. Its strong geographic coverage also allows it to<br />
service the smaller NOCs. Other key clients include AGIP, BHP Billiton <strong>and</strong> Woodside.<br />
<strong>WorleyParsons</strong> has been involved in the development <strong>of</strong> many large <strong>and</strong> technically <strong>com</strong>plex fixed <strong>of</strong>fshore facilities.<br />
<strong>WorleyParsons</strong> has provided project services to many onshore developments including gas plants, production facilities <strong>and</strong><br />
terminals. The Hydrocarbons group has recognised capabilities in both <strong>of</strong>fshore <strong>and</strong> onshore pipeline design.<br />
The refining <strong>and</strong> petrochemical industry en<strong>com</strong>passes the downstream processing <strong>of</strong> oil <strong>and</strong> gas. <strong>WorleyParsons</strong> has held<br />
long-term relationships with a number <strong>of</strong> major refineries <strong>and</strong> petrochemical producers <strong>and</strong> has experience with many<br />
processes associated with the refining <strong>and</strong> production <strong>of</strong> petrochemicals <strong>and</strong> their associated derivatives. Customers include<br />
many downstream affiliates <strong>of</strong> the IOCs <strong>and</strong> NOCs.<br />
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Section 2 <strong>WorleyParsons</strong>’ existing business continued<br />
<strong>WorleyParsons</strong>’ Hydrocarbons group is recognised as a leader in the development <strong>of</strong> long term relationship-based contracting<br />
in the Australasian <strong>and</strong> South-East Asian region. <strong>WorleyParsons</strong> holds a number <strong>of</strong> long-term contracts for the provision <strong>of</strong><br />
services under alliance arrangements to support the operation <strong>of</strong> assets.<br />
The Company has recently announced a number <strong>of</strong> major contracts in the hydrocarbons sector including:<br />
... April 2006 – Kuwait Oil Company awarded <strong>WorleyParsons</strong> a US$220 million contract to provide EPCM services for its gas oil<br />
pipeline project;<br />
... June 2006 – Abu Dhabi Gas Industries <strong>and</strong> Abu Dhabi Gas Liquefaction Company awarded <strong>WorleyParsons</strong> three contracts<br />
with a total estimated value <strong>of</strong> approximately US$36 million;<br />
... November 2006 – awarded US$250 million contract by Saudi International Petrochemical Company (Sipchem) for project<br />
management services for its phase 3 olefins <strong>and</strong> derivatives <strong>com</strong>plex; <strong>and</strong><br />
... December 2006 – awarded US$220 million five-year contract by Mobil Producing Nigeria for EPCM services to support the<br />
execution <strong>of</strong> a portfolio <strong>of</strong> projects <strong>of</strong>fshore Nigeria.<br />
<strong>WorleyParsons</strong> has also announced the recent acquisition <strong>of</strong> Houston-based Sea Engineering that will enhance its capability in<br />
the floating <strong>of</strong>fshore structures market.<br />
2.3 Power<br />
For the year ended 30 June 2006, the Power group accounted for 15% <strong>of</strong> Aggregated Revenue <strong>and</strong> 20% <strong>of</strong> EBIT.<br />
<strong>WorleyParsons</strong> <strong>of</strong>fers a <strong>com</strong>prehensive set <strong>of</strong> project services to the global power industry from <strong>of</strong>fices throughout America,<br />
Europe <strong>and</strong> Asia Pacific.<br />
<strong>WorleyParsons</strong> has extensive experience in the power industry tracing its roots in the power sector to US <strong>com</strong>panies Chas.<br />
T. Main <strong>and</strong> Gilbert/Commonwealth. The power presence <strong>of</strong> <strong>WorleyParsons</strong> in Asia Pacific was enhanced in 2005 by the<br />
acquisition <strong>of</strong> Development Resources, the power consultancy arm <strong>of</strong> Singapore Power <strong>and</strong> the acquisition in 2006 <strong>of</strong> the<br />
remaining 50% <strong>of</strong> Burns & Roe Worley Pty Ltd in Australia.<br />
Drawing from this long history <strong>of</strong> <strong>com</strong>bined experience, <strong>WorleyParsons</strong> has performed engineering, design, procurement <strong>and</strong><br />
construction management for hundreds <strong>of</strong> power, industrial, <strong>com</strong>mercial <strong>and</strong> government customers. Providing services to coal,<br />
gas, oil <strong>and</strong> nuclear-fuelled plants <strong>and</strong> electric transmission networks, <strong>WorleyParsons</strong> has been involved in supplying over<br />
153,300 MW <strong>of</strong> generation capacity worldwide.<br />
Customers in these industries include power authorities, independent power producers, government, the financial <strong>com</strong>munity<br />
<strong>and</strong> industrial organisations.<br />
Major activity in the Power group for the 18 months to 31 December 2006 included significant project activity in Bulgaria on<br />
the Belene nuclear facility <strong>and</strong> the Maritza coal station. In the US, <strong>WorleyParsons</strong> provided full engineering services for the<br />
Tennessee Valley Authority’s (TVA) generating sites consisting <strong>of</strong> 11 fossil plants <strong>and</strong> 32 hydro plants. <strong>WorleyParsons</strong> also<br />
provides, in a joint venture, construction modifications <strong>and</strong> supplemental maintenance at six <strong>of</strong> TVA’s fossil plants <strong>and</strong> all<br />
hydro plants.<br />
<strong>WorleyParsons</strong> was recently awarded a services contract for engineering, procurement support <strong>and</strong> construction management<br />
for Santee Cooper’s new 600 MW coal-fired generation facility near Kingsburg in South Carolina. <strong>WorleyParsons</strong> has also been<br />
awarded contracts for the preliminary phases <strong>of</strong> integrated gasification <strong>com</strong>bined cycle projects, projects involving the control<br />
<strong>of</strong> carbon dioxide emissions from power facilities as well as projects to reduce sulphur, mercury <strong>and</strong> nitrous oxide emissions.<br />
The Company is also providing services for the licensing <strong>of</strong> new nuclear facilities in the US.<br />
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2.4 Minerals & Metals<br />
The Minerals & Metals group provides consulting, design <strong>and</strong> project services to light metals (alumina, aluminium, magnesium),<br />
base metals (copper, nickel, zinc, lead), coal, ferrous (iron ore, steel), mineral s<strong>and</strong>s <strong>and</strong> chemicals (titanium dioxide, fertilisers,<br />
nitric acid) sectors. <strong>WorleyParsons</strong>’ Minerals & Metals group has extensive experience with greenfields as well as <strong>com</strong>plex<br />
brownfields <strong>and</strong> sustaining capital projects. In particular, <strong>WorleyParsons</strong> is recognised for its alumina process design <strong>and</strong> project<br />
delivery capability.<br />
For the year ended 30 June 2006, the Minerals & Metals group accounted for 8% <strong>of</strong> Aggregated Revenue <strong>and</strong> 11% <strong>of</strong> EBIT.<br />
<strong>WorleyParsons</strong>’ Minerals & Metals business continues its use <strong>of</strong> the alliance-based contracting strategy, with established<br />
alliances with BHP Billiton, Hydro Aluminium, OneSteel, Tomago Aluminium <strong>and</strong> Zinifex among others.<br />
<strong>WorleyParsons</strong>’ coverage within the sector has increased significantly, with the Minerals & Metals group now operating in<br />
Canada, the US, Chile, China <strong>and</strong> the Middle East, <strong>and</strong> performing contracts for customers in the UK, India, Indonesia, Saudi<br />
Arabia, Abu Dhabi, Russia <strong>and</strong> Africa.<br />
Major contracts awarded recently include a US$133 million program management services contract from Saudi Arabian mining<br />
<strong>com</strong>pany Ma’aden for the Ma’aden phosphate development project, <strong>and</strong> a $160 million contract from Pilbara Infrastructure for<br />
its Pilbara iron ore <strong>and</strong> infrastructure project.<br />
<strong>WorleyParsons</strong>’ Minerals & Metals business has made a number <strong>of</strong> strategic acquisitions <strong>and</strong> investments since 2002 to<br />
increase its global reach <strong>and</strong> strengthen its technical process capability. These acquisitions include, HG Engineering (Toronto),<br />
the remaining 49% <strong>of</strong> Jones & Jones Engineering (Geelong) <strong>and</strong> a recent investment in Arze, recine y Asociados Ingenieros<br />
Consultores SA (Santiago).<br />
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Section 2 <strong>WorleyParsons</strong>’ existing business continued<br />
2.5 Infrastructure<br />
The Infrastructure group provides specialist design <strong>and</strong> project services in the civil, structural, environmental, geotechnical <strong>and</strong><br />
coastal <strong>and</strong> marine fields. Its customer base covers some <strong>of</strong> the leading organisations in the energy <strong>and</strong> resource sectors <strong>and</strong><br />
government, transport infrastructure, <strong>com</strong>mercial <strong>and</strong> residential developments.<br />
For the year ended 30 June 2006, the <strong>WorleyParsons</strong> Infrastructure group accounted for 5% <strong>of</strong> Aggregated Revenue <strong>and</strong><br />
approximately 4% <strong>of</strong> EBIT.<br />
The Infrastructure group <strong>com</strong>plements <strong>WorleyParsons</strong>’ capabilities in the other sectors it operates in, enabling <strong>WorleyParsons</strong><br />
to provide a broader range <strong>of</strong> services to development projects <strong>and</strong> asset operations support in the energy, resource <strong>and</strong><br />
<strong>com</strong>plex process industries.<br />
The acquisition <strong>and</strong> integration <strong>of</strong> the Calgary-based Komex environmental business in January 2006 has provided a significant<br />
increase in the scale <strong>and</strong> capability <strong>of</strong> the infrastructure business. Komex provides pr<strong>of</strong>essional services in the environmental<br />
<strong>and</strong> groundwater sectors.<br />
Other recent developments included the <strong>com</strong>mencement <strong>of</strong> work on two world-scale infrastructure projects in conjunction<br />
with the Minerals & Metals group, for the Ma’aden phosphate development project <strong>and</strong> the Pilbara infrastructure project, <strong>and</strong><br />
the acquisition <strong>of</strong> Sydney-based rail service group TMG.<br />
With the acquisition <strong>of</strong> the remaining 50% <strong>of</strong> Burns & Roe Worley Pty Ltd in 2006, <strong>WorleyParsons</strong> has increased its capability in<br />
the water processing industry.<br />
2.6 <strong>WorleyParsons</strong>’ existing Canadian operations<br />
<strong>WorleyParsons</strong> currently has over 1,200 personnel providing engineering, project <strong>and</strong> environmental services in Canada. The<br />
Canadian operations began in 2003 through Calgary-based <strong>WorleyParsons</strong> MEG servicing the hydrocarbon market. It was<br />
exp<strong>and</strong>ed through <strong>WorleyParsons</strong> Komex, an environmental services business acquired in 2005 <strong>and</strong> <strong>WorleyParsons</strong> HGE, a<br />
Toronto-based Minerals & Metals consulting <strong>and</strong> project services business, also acquired in 2005.<br />
With over 600 personnel, <strong>WorleyParsons</strong> MEG provides specialist <strong>and</strong> project services in conventional oil, thermal heavy oil <strong>and</strong><br />
oil s<strong>and</strong>s <strong>and</strong> has <strong>com</strong>pleted multiple overseas projects from its Calgary base. The operation has grown organically since 2003.<br />
<strong>WorleyParsons</strong> Komex employs over 500 personnel <strong>and</strong> is one <strong>of</strong> Canada’s leading environmental <strong>and</strong> water resources<br />
consultants, servicing its clients through <strong>of</strong>fices across Canada. It also provides specialist geotechnical <strong>and</strong> geophysical<br />
services.<br />
<strong>WorleyParsons</strong> HGE provides consulting <strong>and</strong> project services for the base metals <strong>and</strong> steel industries <strong>and</strong> specialist services<br />
in the cleaning <strong>of</strong> waste gases from metals process plants. It services Canada, the Americas <strong>and</strong> Africa, utilising its<br />
125 Toronto-based staff.<br />
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2.7 Historical financial performance<br />
Set out below is a summary <strong>of</strong> <strong>WorleyParsons</strong>’ financial results for the three years ended 30 June 2006 <strong>and</strong> the six months<br />
ended 31 December 2006:<br />
Table 1 <strong>WorleyParsons</strong> historical financial performance<br />
12 months to 12 months to 12 months to 6 months to<br />
A$m 30 June 2004 1 30 June 2005 30 June 2006 31 December 2006<br />
Aggregated Revenue 2 514.8 1,379.5 2,464.4 1,459.8<br />
EBITDA 49.0 117.0 219.9 141.5<br />
EBIT 40.4 102.3 199.5 131.2<br />
Net pr<strong>of</strong>it after tax 30.7 66.5 139.1 94.5<br />
Basic normalised EPS (cents) 3 22.9 36.6 68.5 46.5<br />
Notes:<br />
1 The financial results for the 12 months to 30 June 2004 were accounted for under historical Australian GAAP. If this information was restated as though<br />
Australian Equivalents to International Financial Reporting St<strong>and</strong>ards (AIFRS) had been applied for the period, the impact <strong>of</strong> this would be to increase EBIT <strong>and</strong> net<br />
pr<strong>of</strong>it by A$2.1 million <strong>and</strong> earnings per share by 0.8 cents per share <strong>com</strong>pared to that reported under historical Australian GAAP as shown in the table above.<br />
2 Aggregated Revenue includes revenue from associates <strong>and</strong> excludes pass through procurement services for nil margin.<br />
3 Before amortisation <strong>of</strong> intangible assets including tax effect <strong>of</strong> amortisation expense.<br />
The following charts show <strong>WorleyParsons</strong>’ EBITDA <strong>and</strong> normalised EPS growth since the <strong>com</strong>pany’s listing in 2002.<br />
Chart 7 <strong>WorleyParsons</strong> EBITDA growth<br />
Chart 8 <strong>WorleyParsons</strong> normalised EPS growth<br />
Compound annual growth rate = 60%<br />
Compound annual growth rate = 43%<br />
250<br />
220<br />
80<br />
69<br />
(A$m)<br />
200<br />
150<br />
100<br />
50<br />
34<br />
42<br />
49<br />
117<br />
(cents)<br />
60<br />
40<br />
20<br />
16<br />
20<br />
23<br />
37<br />
0<br />
0<br />
FY 30 June<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2002 2003 2004 2005 2006<br />
Note:<br />
The 2005 <strong>and</strong> 2006 results are prepared under AIFRS <strong>and</strong> the 2002-2004 results are prepared under historical Australian GAAP.<br />
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Section 2 <strong>WorleyParsons</strong>’ existing business continued<br />
2.7.1 Results highlights for the six months ended 31 December 2006<br />
<strong>WorleyParsons</strong>’ operations are performing well by responding to the continued level <strong>of</strong> dem<strong>and</strong> being experienced across<br />
the business. The performance <strong>of</strong> the businesses <strong>WorleyParsons</strong> has acquired recently, with the exception <strong>of</strong> the 50% share <strong>of</strong><br />
Burns & Roe Pty Limited, is in line with or ahead <strong>of</strong> expectations. In the industries in which <strong>WorleyParsons</strong> operates, the<br />
challenge for the business is to match the right resources with dem<strong>and</strong>. The international operations <strong>of</strong> <strong>WorleyParsons</strong> now<br />
contribute 70% <strong>of</strong> pr<strong>of</strong>it before tax.<br />
2.7.2 Outlook<br />
<strong>WorleyParsons</strong> expects the markets for its services will continue to be strong. <strong>WorleyParsons</strong>’ key markets <strong>and</strong> sectors are<br />
experiencing positive conditions <strong>and</strong> the business is well positioned to respond to these opportunities. Subject to conditions<br />
remaining favourable in these markets, it is expected that earnings will increase in the second half <strong>of</strong> 2007. <strong>WorleyParsons</strong><br />
continues to evaluate opportunities for new business growth that will add to existing capabilities <strong>and</strong> provide value for<br />
Shareholders.<br />
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Section 3<br />
Colt<br />
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Section 3 Colt<br />
3.1 Background<br />
On 8 February 2007, <strong>WorleyParsons</strong> announced it had entered an agreement to acquire Colt.<br />
Colt was founded in 1973 <strong>and</strong> has since be<strong>com</strong>e a leading provider <strong>of</strong> project services to the Canadian energy <strong>and</strong> resource<br />
industries with a focus on the hydrocarbons industry.<br />
The Colt businesses are currently owned by a partnership with ownership arrangements governed by a partnership agreement<br />
(the Partnership). The businesses are operated through a series <strong>of</strong> limited liability <strong>com</strong>panies, which are owned by the<br />
Partnership. The Partnership has 33 partners, including 23 active partners.<br />
3.2 Overview <strong>of</strong> Colt<br />
Colt’s markets are the oil <strong>and</strong> gas, refinery, chemicals, pipelines, petrochemicals <strong>and</strong> power sectors. Colt provides services to<br />
these hydrocarbons <strong>and</strong> power sectors <strong>and</strong> also performs fabrication <strong>and</strong> construction services through its Cord Projects<br />
division based in Alberta. Colt has in excess <strong>of</strong> 4,600 employees with <strong>of</strong>fices located in Calgary, Edmonton, Sarnia, Toronto<br />
<strong>and</strong> Anchorage.<br />
Colt operates in two market segments: hydrocarbons <strong>and</strong> power.<br />
The diagram below sets out the operational structure <strong>of</strong> Colt:<br />
Diagram 5 Colt operational structure<br />
Colt<br />
Calgary Edmonton Sarnia Toronto CoSyn NANA/Colt Colt<br />
Geomatics<br />
Cord<br />
Projects<br />
Colt’s reputation is built upon its recognised technical capabilities, long-st<strong>and</strong>ing customer relationships, application <strong>of</strong><br />
technologies <strong>and</strong> a record <strong>of</strong> successful project delivery. Projects vary in <strong>com</strong>plexity <strong>and</strong> length <strong>and</strong> can range from early stage<br />
feasibility studies to detailed design, project management <strong>and</strong> project delivery.<br />
Colt’s range <strong>of</strong> services includes:<br />
... engineering ... construction<br />
... procurement ... geospatial information systems <strong>and</strong> data management<br />
... project management ... construction management.<br />
Colt services are provided to the following industries:<br />
... conventional oil <strong>and</strong> gas production ... pipelines<br />
... oil s<strong>and</strong>s production ... refining <strong>and</strong> upgrading<br />
... heavy oil production ... power.<br />
... gas processing<br />
Colt maintains relationships across a broad customer base including Canadian energy <strong>com</strong>panies such as Devon Energy<br />
Corporation, Enbridge Pipelines, EPCOR, Imperial Oil, Nexen Energy, Pembina Pipelines, Petro-Canada, Suncor Energy, Syncrude<br />
<strong>and</strong> Talisman Energy <strong>and</strong> a number <strong>of</strong> IOCs such as BP, Chevron, ConocoPhillips, ExxonMobil <strong>and</strong> Shell.<br />
Approximately 90% <strong>of</strong> Colt’s projects are cost-reimbursable <strong>and</strong> they use a range <strong>of</strong> contracting approaches from one-<strong>of</strong>f<br />
contracts to alliance/Supplier <strong>of</strong> Choice (SOC) arrangements employing integrated teams. In this respect, Colt’s approach to<br />
contract risk is similar to that <strong>of</strong> <strong>WorleyParsons</strong>’.<br />
Colt has established <strong>and</strong> continues to work in a number <strong>of</strong> alliance <strong>and</strong> SOC contracting relationships in the Canadian market.<br />
The CoSyn alliance established by Colt <strong>and</strong> Syncrude is Colt’s largest alliance, with around 490 dedicated Colt personnel.<br />
Alliance <strong>and</strong> SOC relationships represented approximately 54% <strong>of</strong> revenue for the year ended 31 January 2007 (estimated).<br />
Colt has also formed such relationships with Enbridge Pipelines, EPCOR, Imperial Oil, Petro-Canada, Shell, Suncor Energy <strong>and</strong><br />
Talisman Energy. In addition, major projects accounted for 32% <strong>and</strong> small projects 14% <strong>of</strong> revenue for the year ended<br />
31 January 2007 (estimated).<br />
An estimated 65% <strong>of</strong> Colt’s revenue for the year ended 31 January 2007 related to brownfield project work. This work has<br />
historically provided a stable workload for the business. The charts below set out Colt’s revenue by sector <strong>and</strong> project type for<br />
the year ended 31 January 2007 (estimated).<br />
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Chart 9 Revenue by project type for year ended<br />
Chart 10 Revenue by project stage for year ended<br />
31 January 2007 (estimated) 31 January 2007 (estimated)<br />
Alliances <strong>and</strong> SOCs 54%<br />
Other major projects 32%<br />
Small projects 14%<br />
Brownfield 65%<br />
Greenfield 35%<br />
3.3 Key Colt management<br />
Pr<strong>of</strong>iles <strong>of</strong> some <strong>of</strong> the key members <strong>of</strong> the Colt management team are detailed in the table below.<br />
Larry Benke, Colt President, will be responsible for the Canadian operations <strong>of</strong> the Combined Group <strong>and</strong> will report to<br />
<strong>WorleyParsons</strong> CEO, John Grill. Subject to Completion, Larry will also act as Bill Hall’s alternate Director on the Board. Larry Benke<br />
is a Vendor <strong>and</strong> has a 6.32% interest in Colt. As part <strong>of</strong> the Acquisition, he has agreed to enter into an employment agreement<br />
which provides for an annual salary <strong>of</strong> C$575,000. In addition, he is eligible to receive up to 32% <strong>of</strong> his annual salary under the<br />
<strong>WorleyParsons</strong> short-term incentive plan <strong>and</strong> up to 23% under the long-term incentive plan, which percentages exceed the<br />
ranges set out in <strong>WorleyParsons</strong>’ Executive Remuneration Policy.<br />
Table 2 Key Colt management<br />
Name Position Experience <strong>and</strong> qualifications<br />
Larry Benke President Larry joined Colt in Edmonton as a design engineer in<br />
1977 <strong>and</strong> has undertaken engineering design, project<br />
management <strong>and</strong> other management roles within the<br />
business. In 1988, Larry established the Toronto <strong>and</strong><br />
Sarnia <strong>of</strong>fices as General Manager before returning to<br />
Calgary in 1999 as President <strong>of</strong> Colt. He has been<br />
successful in leading Colt through a period <strong>of</strong> substantial<br />
growth <strong>and</strong> expansion into the new disciplines <strong>of</strong><br />
pipelines, power generation <strong>and</strong> geomatics. Larry<br />
graduated from the University <strong>of</strong> Alberta with a Bachelor<br />
<strong>of</strong> Science in Electrical Engineering (Honours St<strong>and</strong>ing).<br />
Greg Barnes Vice President –<br />
Operations<br />
Brian Janzen Vice President –<br />
Finance<br />
Greg has over 30 years’ experience in engineering <strong>and</strong><br />
project management roles. In 2006, he became Vice<br />
President <strong>of</strong> Operations after 10 years as General<br />
Manager <strong>of</strong> Colt’s Calgary <strong>of</strong>fice. Prior to joining Colt,<br />
Greg held various project management roles at Husky Oil.<br />
Greg holds Bachelor <strong>and</strong> Masters Degrees in Mechanical<br />
Engineering.<br />
Brian is a Chartered Accountant with 20 years’<br />
experience in various aspects <strong>of</strong> financial management<br />
including control, financial analysis, treasury, in<strong>com</strong>e<br />
taxes, budgets, audits <strong>and</strong> financial administration. Prior<br />
to be<strong>com</strong>ing Vice President in 2005, Brian held the<br />
position <strong>of</strong> Director <strong>of</strong> Finance since 2001. Brian<br />
previously held senior financial management roles with<br />
Digital Oilfield, Vendanges Investments <strong>and</strong> Argus<br />
Technologies.<br />
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Section 3 Colt continued<br />
Name Position Experience <strong>and</strong> qualifications<br />
Brian Faulkner<br />
General Manager<br />
– Toronto<br />
Brian became General Manager <strong>of</strong> Colt’s Toronto<br />
business unit in 2002 after 20 years’ experience as chief<br />
engineer, senior engineer <strong>and</strong> engineering manager with<br />
SNC-Lavalin. Brian has wide-ranging technical <strong>and</strong><br />
administrative experience with capital projects for the<br />
industrial, petrochemical, chemical <strong>and</strong> municipal sectors.<br />
Ewart Cameron<br />
General Manager<br />
– Cord Projects<br />
Ewart was appointed General Manager <strong>of</strong> Cord Projects<br />
in 2001 after three years as Manager <strong>of</strong> Colt’s Excel<br />
alliance with Petro-Canada. He has also held numerous<br />
alliance <strong>and</strong> project management roles with Fluor Daniel<br />
Canada, Alcoa <strong>and</strong> Procter & Gamble. Ewart has over 35<br />
years <strong>of</strong> experience in the engineering <strong>and</strong> construction<br />
industry.<br />
R<strong>and</strong>y Karren<br />
General Manager<br />
– Calgary<br />
R<strong>and</strong>y became General Manager <strong>of</strong> Colt’s Calgary division<br />
in 2005 after spending 19 years with Colt as an<br />
engineer, project manager <strong>and</strong> later engineering<br />
manager. R<strong>and</strong>y has 30 years’ experience in operating<br />
plant, fabricating plant <strong>and</strong> consulting environments <strong>and</strong><br />
holds a Bachelor <strong>of</strong> Science in Chemical Engineering from<br />
the University <strong>of</strong> Calgary.<br />
Marty Gaulin<br />
General Manager<br />
– Sarnia<br />
Marty has 23 years <strong>of</strong> facilities <strong>and</strong> pipeline engineering<br />
experience including seven years <strong>of</strong> gas plant operations,<br />
maintenance <strong>and</strong> facilities experience. Before be<strong>com</strong>ing<br />
General Manager, Sarnia, Marty held alliance manager<br />
roles for the Talisman <strong>and</strong> Petro-Canada alliances.<br />
David Parker<br />
General Manager<br />
– Colt Geomatics<br />
Prior to joining Colt, David was Manager <strong>of</strong> Pipeline<br />
Projects at AMEC, where he created a new business unit<br />
serving customers such as Encana, Syncrude, TransAlta<br />
<strong>and</strong> Williams Gas Pipelines. David holds a Bachelor <strong>of</strong> Civil<br />
Engineering <strong>and</strong> a Masters <strong>of</strong> Business Administration<br />
(MBA) <strong>and</strong> has <strong>com</strong>pleted the Executive MBA program at<br />
the University <strong>of</strong> Calgary.<br />
Jacob Kellerman<br />
General Manager<br />
– Edmonton<br />
Before be<strong>com</strong>ing General Manager at Edmonton, Jacob<br />
held positions as General Manager at Sarnia <strong>and</strong> Plant<br />
Manager for Safripol in South Africa. Jacob has 24 years’<br />
experience in operations, design <strong>and</strong> management in the<br />
polyolefin industry.<br />
John Minier<br />
General Manager<br />
– NANA/Colt<br />
John has 32 years <strong>of</strong> military <strong>and</strong> private industry<br />
experience in management <strong>and</strong> engineering at various<br />
levels <strong>of</strong> the oil <strong>and</strong> gas industry. Prior to joining<br />
NANA/Colt, John was the Founding President <strong>of</strong> NANA<br />
Pacific, a construction <strong>and</strong> construction management<br />
<strong>com</strong>pany supporting the government sector. He holds a<br />
Bachelor <strong>of</strong> Science in Engineering <strong>and</strong> Applied Sciences<br />
from the US Military Academy.<br />
34 <strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong>
3.4 Office locations<br />
Colt’s <strong>of</strong>fices are located in Calgary, Edmonton, Sarnia <strong>and</strong> Toronto in Canada <strong>and</strong> Anchorage in the US. Diagram 6 shows the<br />
locations <strong>of</strong> these <strong>of</strong>fices. Additionally, Colt has substantial staff in Fort McMurray working on customer sites.<br />
Diagram 6 Colt’s <strong>of</strong>fice locations<br />
Anchorage<br />
Oil S<strong>and</strong>s Region<br />
Edmonton<br />
Calgary<br />
Toronto<br />
Sarnia<br />
In Alaska, Colt’s services are provided through a 50:50 joint venture with NANA Development Corporation. The NANA/Colt<br />
Alaska joint venture provides EPCM services to major <strong>and</strong> small oil <strong>and</strong> gas producers in Alaska with a focus on Alaska’s North<br />
Slope oil <strong>and</strong> gas region. NANA/Colt has significant experience in Arctic cold-region work <strong>and</strong> remote areas <strong>and</strong> also has<br />
pipeline, fire <strong>and</strong> gas <strong>and</strong> suppression <strong>and</strong> utilities experience.<br />
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Section 3 Colt continued<br />
3.5 Hydrocarbons<br />
Colt’s Hydrocarbons activities accounted for more than 90% <strong>of</strong> total revenue for the 12 months ended 31 January 2007<br />
(estimated). This included 16% <strong>of</strong> revenue from Cord Projects, described below.<br />
3.5.1 Upstream hydrocarbons<br />
Colt supports projects in conventional oil <strong>and</strong> gas production in addition to heavy oil <strong>and</strong> oil s<strong>and</strong>s development projects.<br />
Colt has significant experience in providing project services to:<br />
... onshore production facilities;<br />
... onshore oil <strong>and</strong> gas plants <strong>and</strong> terminals; <strong>and</strong><br />
... onshore pipelines <strong>and</strong> pipeline facilities.<br />
Colt is a leading provider <strong>of</strong> services for oil s<strong>and</strong>s production (both mineable <strong>and</strong> in-situ), transportation <strong>and</strong> processing<br />
facilities. For approximately 30 years, Colt has been involved in the design <strong>and</strong>/or construction management <strong>of</strong> over 3,000 oil<br />
s<strong>and</strong>s related projects. This experience covers all aspects <strong>of</strong> oil s<strong>and</strong>s extraction, including dry materials h<strong>and</strong>ling,<br />
hydrotransport, extraction, froth treatment, water treatment, solvent recovery <strong>and</strong> tailings technology, as well as full <strong>and</strong><br />
partial upgrading facilities.<br />
Colt has designed <strong>and</strong> been involved in the construction <strong>of</strong> oilfield production <strong>and</strong> treating systems with oil gravities ranging<br />
from 6° to 42° (API).<br />
The business has also <strong>com</strong>pleted a large number <strong>of</strong> natural gas production <strong>and</strong> processing projects. These projects have<br />
involved <strong>com</strong>pression, dehydration, natural gas liquid recovery, sweetening, sulphur plants <strong>and</strong> acid gas injection facilities.<br />
Colt is also a leading Canadian pipeline engineering <strong>com</strong>pany, having been involved in the installation <strong>of</strong> over 40,000 kms <strong>of</strong><br />
pipelines <strong>and</strong> associated pipeline facilities.<br />
3.5.2 Downstream hydrocarbons<br />
Colt has experience in providing services to the downstream oil <strong>and</strong> gas sector. Colt has <strong>com</strong>pleted greenfield projects as well<br />
as additions <strong>and</strong> modifications to major refineries, upgraders <strong>and</strong> petrochemical <strong>com</strong>plexes. Colt has in-depth knowledge <strong>of</strong><br />
process design <strong>and</strong> layout considerations, piping systems, pumping, utility <strong>and</strong> control systems for installations <strong>of</strong> equipment<br />
assemblies for refineries.<br />
Since 1990, Colt has had a service agreement with Petro-Canada to provide engineering services for plant upgrades <strong>and</strong><br />
modifications on over 1,000 projects throughout the process units <strong>and</strong> utility systems at the Mississauga <strong>and</strong> Edmonton<br />
refineries.<br />
In 1992, Colt established a partnership with Shell Canada with a m<strong>and</strong>ate to provide EPCM services at the Sarnia <strong>and</strong> Scotford<br />
refineries <strong>and</strong> the styrene plant <strong>and</strong> the Sherwood Marketing Terminal. Colt has participated in over 500 projects with<br />
Shell Canada.<br />
Colt’s revamp <strong>and</strong> turnaround support teams have <strong>com</strong>pleted refinery/upgrader modifications for Suncor, Shell, Petro-Canada,<br />
Syncrude, Co-op <strong>and</strong> Husky Oil.<br />
36 <strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong>
3.5.3 A selection <strong>of</strong> current hydrocarbons projects<br />
A selection <strong>of</strong> Colt’s major current projects being undertaken in the oil <strong>and</strong> gas industry is set out below:<br />
Phase Customer Project Description Project location<br />
Identify Enbridge<br />
Pipelines<br />
Gateway<br />
Engineering services for the initial routing<br />
studies <strong>and</strong> economic evaluation for a diluted<br />
bitumen pipeline from Edmonton to Kitimat,<br />
British Columbia.<br />
Alberta <strong>and</strong> British<br />
Columbia<br />
Select<br />
Imperial Oil/<br />
Shell/<br />
Conoco-Phillips<br />
Mackenzie gas<br />
pipeline<br />
Engineering services for the initial routing<br />
studies <strong>and</strong> economic evaluation for a<br />
natural gas pipeline from the Beaufort Sea to<br />
Northern Alberta, including gas processing<br />
<strong>and</strong> <strong>com</strong>pression.<br />
Select Petro-Canada Fort Hills Engineering services, in a joint venture with<br />
AMEC Americas, for a 165,000 bpd mineable<br />
oil s<strong>and</strong>s facility including ore preparation,<br />
extraction, froth treatment <strong>and</strong> utilities<br />
<strong>and</strong> <strong>of</strong>fsites.<br />
Define Nexen Energy Long Lake South EP services for a 70,000 bpd in-situ steam<br />
assisted gravity drainage (SAGD) facility.<br />
Define Suncor Energy Voyageur<br />
hydro-treaters<br />
Execute<br />
Execute<br />
Albian S<strong>and</strong>s<br />
Energy (Shell,<br />
Chevron, Western<br />
Oil S<strong>and</strong>s)<br />
Devon Energy<br />
Corporation<br />
Athabasca oil<br />
s<strong>and</strong>s project<br />
expansion<br />
Jackfish<br />
EP services for five hydro-treaters for the<br />
Voyageur bitumen upgrader.<br />
EPCM for a 90,000 bpd expansion <strong>of</strong> the<br />
Athabasca mineable oil s<strong>and</strong>s facility. This<br />
project is being <strong>com</strong>pleted in a joint venture<br />
with AMEC Americas.<br />
EP services for a 35,000 bpd in-situ SAGD<br />
facility.<br />
Operate Talisman Energy “Prime” alliance Ongoing EPCM services for Talisman Energy’s<br />
ongoing production in the Western Canadian<br />
basin.<br />
Operate Syncrude CoSyn Ongoing EPCM services to support<br />
Syncrude’s ongoing operations in<br />
Fort McMurray.<br />
Northwest<br />
Territories <strong>and</strong><br />
Alberta<br />
North <strong>of</strong> Fort<br />
McMurray<br />
South <strong>of</strong> Fort<br />
McMurray<br />
Fort McMurray<br />
North <strong>of</strong> Fort<br />
McMurray<br />
South <strong>of</strong> Fort<br />
McMurray<br />
Western Canada<br />
Fort McMurray<br />
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Section 3 Colt continued<br />
3.6 Power<br />
Colt’s Power group is located in Edmonton <strong>and</strong> Toronto.<br />
The Power group has diverse power expertise including waste heat recovery, simple <strong>and</strong> <strong>com</strong>bined cycle systems <strong>and</strong><br />
hydrocarbon heat transfer cycles. Colt’s customers include major Canadian utility <strong>com</strong>panies TransAlta, Ontario Power<br />
Generation <strong>and</strong> EPCOR. In addition, Colt executes utility <strong>and</strong> cogeneration projects within major oil <strong>and</strong> gas <strong>and</strong><br />
infrastructure projects.<br />
Recent experience includes:<br />
... TransAlta EPCOR Keephills 3 – 450 MW coal-fired power plant. Colt is <strong>com</strong>pleting preliminary engineering for this EPCM<br />
contract. Detailed engineering will <strong>com</strong>mence in 2007 with the facility start-up expected in late 2010;<br />
... Nexen Long Lake – 180 MW cogeneration facility;<br />
... Ontario Power Generation – provision <strong>of</strong> engineering services for Balance <strong>of</strong> Plant work on various power stations in the<br />
Ontario region. This work is <strong>com</strong>pleted under an Engineering Services Agreement which has been in place since early 2006;<br />
<strong>and</strong><br />
... Toronto Airport – owner’s engineer for a 117 MW <strong>com</strong>bined cycle cogeneration power plant facility.<br />
38 <strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong>
3.7 Cord Projects<br />
Cord Projects is Colt’s construction <strong>and</strong> fabrication business which was established in 1978.<br />
The Canadian hydrocarbons market operates in extreme weather conditions for part <strong>of</strong> the year. This factor <strong>and</strong> the distance<br />
<strong>of</strong> the oil s<strong>and</strong>s region from the major industrial centres require operators in the industry to have fabrication <strong>of</strong> some facilities<br />
constructed on a modular basis <strong>and</strong> shipped to the production site to be assembled <strong>and</strong> <strong>com</strong>missioned on site.<br />
The high level <strong>of</strong> capital development in the oil s<strong>and</strong>s region in recent years has resulted in a shortage <strong>of</strong> fabrication capacity in<br />
the industry <strong>and</strong> is a limiting factor in the speed <strong>of</strong> the development <strong>of</strong> oil s<strong>and</strong>s projects. In response to the increasing dem<strong>and</strong><br />
for fabricated modules, Cord established its Edmonton module fabricating facility in 2005.<br />
Cord Projects operates with the appropriate level <strong>of</strong> HSE systems for a construction organisation <strong>and</strong> has also established<br />
strong <strong>com</strong>mercial <strong>and</strong> risk management systems that have enabled the division to operate pr<strong>of</strong>itably since inception. Risk in<br />
the Cord division is further managed by limitations around the size, labour posture <strong>and</strong> technical <strong>com</strong>plexity <strong>of</strong> the projects<br />
undertaken.<br />
Cord Projects accounted for 16% <strong>of</strong> Colt revenue for the 12 months ended 31 January 2007 (estimated).<br />
Cord Projects provides mechanical, piping <strong>and</strong> structural work across the various hydrocarbons sectors in Western Canada. The<br />
division carries out both reimbursable <strong>and</strong> fixed price work through its module yard <strong>and</strong> piping fabrication facility <strong>and</strong> supplies<br />
personnel to customer-generated sites.<br />
Cord Projects’ primary areas <strong>of</strong> expertise include:<br />
... direct-hire construction services ... <strong>com</strong>missioning/de<strong>com</strong>missioning<br />
... shop fabrication/modularisation ... construction management.<br />
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Section 3 Colt continued<br />
3.8 Alliance <strong>and</strong> Supplier <strong>of</strong> Choice (SOC) relationships<br />
Colt has established a number <strong>of</strong> alliance <strong>and</strong> SOC relationships, which have helped it exp<strong>and</strong> both the scope <strong>and</strong> scale <strong>of</strong><br />
services it provides to key customers. These relationships contributed approximately 54% <strong>of</strong> Colt’s revenue in the year ended<br />
31 January 2007 (estimated). Colt’s key alliances <strong>and</strong> SOC relationships are detailed below:<br />
Customer Name Description Sector<br />
Syncrude CoSyn Largest long-term relationship, with approximately<br />
490 dedicated Colt personnel. Formed in 1991, based in<br />
Edmonton <strong>and</strong> the Syncrude facility, CoSyn supports<br />
Syncrude’s Fort McMurray operations.<br />
CoSyn is responsible for providing a broad range <strong>of</strong><br />
engineering <strong>and</strong> project services. Syncrude is the world’s<br />
largest producer <strong>of</strong> light sweet crude oil from oil s<strong>and</strong>.<br />
Mineable oil s<strong>and</strong>s<br />
Imperial Oil (Esso)<br />
Upstream,<br />
Action Alliance<br />
Upstream alliance was formed in 1991 involving small<br />
project engineering <strong>and</strong> FEED work on Imperial Oil’s Cold Lake<br />
oil s<strong>and</strong>s facilities <strong>and</strong> conventional oil <strong>and</strong> gas facilities.<br />
Action Alliance for EPCM services to the Nanticoke refinery.<br />
Talisman Energy Talisman Energy Alliance involves FEED <strong>and</strong> engineering support to Talisman<br />
Energy’s gas pipelines <strong>and</strong> facilities in Western Canada <strong>and</strong><br />
New York.<br />
Shell Shell National agreement under which Colt carries out all small<br />
project base plant work at Shell’s oil refineries in Edmonton<br />
<strong>and</strong> Sarnia.<br />
Oil <strong>and</strong> gas, refining<br />
Oil <strong>and</strong> gas<br />
Refining<br />
Suncor Suncor SOC SOC since 2004 for EP services in Canada. Oil s<strong>and</strong>s, upgrading<br />
<strong>and</strong> pipelines<br />
Petro-Canada Excel, Pacer, APEC Three separate long-term alliances for EPCM services to its<br />
Western Canada gas unit, its western region rack-back unit<br />
<strong>and</strong> its lubricants manufacturing <strong>and</strong> central region business<br />
units.<br />
Refining, oil <strong>and</strong> gas<br />
Enbridge Enbridge Two separate evergreen contracts for EPC services in<br />
Canada.<br />
Pipelines <strong>and</strong> pipeline<br />
facilities<br />
3.9 Joint venture relationships<br />
In order to broaden the scope <strong>and</strong> scale <strong>of</strong> services provided to customers, Colt is currently involved in a number <strong>of</strong> joint venture<br />
<strong>and</strong> teaming relationships.<br />
3.9.1 NANA/Colt<br />
In Alaska, Colt’s services are provided through a joint venture with NANA Development Corporation. NANA Development<br />
Corporation was created in 1971 by a Congressional Act to solve the l<strong>and</strong> claim struggles between the Alaskan Natives,<br />
State <strong>of</strong> Alaska <strong>and</strong> the US federal government. NANA Development Corporation is owned by over 11,400 Inupiat Eskimo<br />
shareholders <strong>and</strong> its stated mission is to improve the quality <strong>of</strong> life <strong>of</strong> the Inupiat people. The NANA/Colt 50:50 joint venture is<br />
an incorporated <strong>com</strong>pany which provides EPCM services to major <strong>and</strong> small oil <strong>and</strong> gas producers in Alaska (see Section 3.4).<br />
The joint venture contributed approximately 3% <strong>of</strong> total revenue for the year ended 31 January 2007 (estimated).<br />
3.9.2 Other joint venture relationship<br />
Colt <strong>and</strong> AMEC Americas have formed a series <strong>of</strong> joint ventures to pursue <strong>and</strong> execute mineable oil s<strong>and</strong>s projects. These<br />
arrangements are project specific <strong>and</strong> are evaluated on a case-by-case basis. Projects that are currently being executed in joint<br />
venture with AMEC Americas include:<br />
... Albian Oil S<strong>and</strong>s – Athabasca oil s<strong>and</strong>s development upstream expansion;<br />
... Albian Oil S<strong>and</strong>s – Athabasca oil s<strong>and</strong>s development expansions 2 <strong>and</strong> 3;<br />
... Petro-Canada – Fort Hills; <strong>and</strong><br />
... Synenco – Northern Lights.<br />
40 <strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong>
3.10 Historical financial performance<br />
Pro forma historical financial performance<br />
Colt’s Pro forma EBITDA for the 12 months ended 31 January 2007 (estimated) is C$106.3 million.<br />
Pro forma EBITDA incorporates:<br />
... st<strong>and</strong>-alone pro forma adjustments to normalise Colt’s historical financial performance to determine Adjusted EBITDA; <strong>and</strong><br />
... other pro forma adjustments to reflect the effect <strong>of</strong> the Acquisition as if it occurred on 1 January 2006.<br />
The pro forma adjustments are described in Section 5.6.<br />
Historical financial performance<br />
For the purposes <strong>of</strong> historical <strong>com</strong>parison <strong>of</strong> Colt’s financial results, the table below sets out the Adjusted financial results for<br />
the years ended 31 January 2004, 2005, 2006 <strong>and</strong> 2007.<br />
12 months to 12 months to 12 months to 12 months to<br />
C$m 31 January 2004 31 January 2005 31 January 2006 31 January 2007E<br />
Adjusted EBITDA 32.3 55.5 81.9 102.6<br />
Depreciation (3.0) (3.8) (5.7) (7.5)<br />
Amortisation – – – –<br />
Adjusted EBIT 29.3 51.7 76.2 95.1<br />
12 months to 12 months to 12 months to 12 months to<br />
A$m 31 January 2004 31 January 2005 31 January 2006 31 January 2007E<br />
Adjusted EBITDA 35.1 58.5 89.8 119.6<br />
Depreciation (3.3) (4.0) (6.2) (8.7)<br />
Amortisation – – – –<br />
Adjusted EBIT 31.8 54.5 83.6 110.9<br />
Exchange rate 1 0.919 0.948 0.912 0.858<br />
Notes:<br />
1 Colt’s financial statements are prepared in Canadian dollars. For the purposes <strong>of</strong> this table, amounts in Canadian dollars have been converted into Australian<br />
dollars at the average exchange rate applicable to each respective financial period.<br />
2 Financial results for the 12 months to 31 January 2007 are based on the actual financial statements <strong>of</strong> Colt for the nine months ended 31 October 2006 <strong>and</strong><br />
estimated results for the three months ended 31 January 2007. For more information, refer Section 5.6.1.<br />
3 Other than the translation to Australian dollars, the estimate <strong>of</strong> the results for the three months ended 31 January 2007 <strong>and</strong> the adjustments discussed below,<br />
the summary <strong>of</strong> results presented in Canadian dollars above are based on the financial statements <strong>of</strong> Colt, on which unqualified audit opinions, in accordance<br />
with Canadian generally accepted auditing st<strong>and</strong>ards (GAAS), were issued by KPMG.<br />
In <strong>com</strong>piling the adjusted financial results set out above, the EBITDA <strong>of</strong> Colt has been adjusted to:<br />
... eliminate in<strong>com</strong>e <strong>and</strong> gains on sale <strong>of</strong> long-term investments;<br />
... equity account associates in accordance with Australian Accounting St<strong>and</strong>ards that were proportionately consolidated under<br />
Canadian GAAP; <strong>and</strong><br />
... include additional salary expenses that would be required were Colt not structured as a partnership.<br />
The financial impact <strong>of</strong> these adjustments has been to decrease EBITDA for the periods reported, in the following amounts:<br />
12 months to 12 months to 12 months to 12 months to<br />
31 January 2004 31 January 2005 31 January 2006 31 January 2007E<br />
Decrease in EBITDA (C$) (1.6) (2.3) (2.6) (3.8)<br />
Decrease in EBITDA (A$) (1.7) (2.4) (2.9) (4.4)<br />
Further pro forma adjustments to EBITDA have been made to give effect to the transactions associated with the Acquisition,<br />
as described in Section 5.6.<br />
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Section 3 Colt continued<br />
3.10.1 Twelve months ended 31 January 2004<br />
Adjusted EBITDA for the 12 months ended 31 January 2004 was C$32.3 million. This result was primarily driven by:<br />
... a stable backlog <strong>of</strong> engineering services work from the alliances <strong>and</strong> the <strong>com</strong>pletion <strong>of</strong> the Petro-Canada McKay River<br />
project; <strong>and</strong><br />
... increased volume <strong>of</strong> work on in-situ oil s<strong>and</strong>s projects <strong>and</strong> Arctic pipelines.<br />
3.10.2 Twelve months ended 31 January 2005<br />
Adjusted EBITDA for the 12 months ended 31 January 2005 was C$55.5 million. This result was primarily driven by:<br />
... increased capital spending in the hydrocarbons industry resulting in an increased project workload in heavy oil <strong>and</strong> Arctic<br />
pipelines; <strong>and</strong><br />
... the award <strong>of</strong> early project work for two world-scale oil s<strong>and</strong>s facilities. In addition, Colt was selected by Suncor as a SOC for<br />
oil s<strong>and</strong>s <strong>and</strong> pipeline projects.<br />
3.10.3 Twelve months ended 31 January 2006<br />
Adjusted EBITDA for the 12 months ended 31 January 2006 increased to C$81.9 million, an increase <strong>of</strong> C$26.4 million (48%)<br />
over the prior year. The 48% increase can be primarily attributed to:<br />
... continued spending in the Canadian <strong>and</strong> Alaskan hydrocarbons markets. As a result <strong>of</strong> this increased spending, Colt was<br />
awarded a number <strong>of</strong> major EP <strong>and</strong> EPCM projects in the heavy oil, oil s<strong>and</strong>s <strong>and</strong> refining sectors in Alberta <strong>and</strong> Ontario.<br />
These projects included Nexen Energy’s Long Lake project <strong>and</strong> Suncor’s Genesis project; <strong>and</strong><br />
... increased workload <strong>of</strong> the Cord Projects division due to strong conditions in the Alberta construction market <strong>and</strong> the addition<br />
<strong>of</strong> a module fabrication facility.<br />
3.10.4 Twelve months ended 31 January 2007 (nine months <strong>of</strong> actual results <strong>and</strong> three months <strong>of</strong><br />
estimated results)<br />
Adjusted EBITDA for the 12 months ended 31 January 2007 is estimated to be C$102.6 million. This reflects an increase <strong>of</strong><br />
C$20.7 million (25%) on the prior year. Earnings growth remains strong primarily due to:<br />
... a number <strong>of</strong> the projects that began in financial year 2005 <strong>and</strong> 2006 moved from the front-end phase to detailed<br />
engineering during this period, including the Albian S<strong>and</strong>s Athabasca oil s<strong>and</strong>s development (upstream expansion) project<br />
<strong>and</strong> Suncor’s mine expansion projects. The most prominent segments continue to be the oil s<strong>and</strong>s, heavy oil <strong>and</strong> refining<br />
sectors <strong>of</strong> the market; <strong>and</strong><br />
... increased workload in the Cord Projects division as a result <strong>of</strong> continued dem<strong>and</strong> in the Canadian construction market <strong>and</strong> a<br />
full year <strong>of</strong> production from the module fabrication facility.<br />
3.11 Outlook statement<br />
The outlook for the Canadian hydrocarbons market remains strong. Colt’s operations are performing well in being able to<br />
respond to the increasing level <strong>of</strong> dem<strong>and</strong> experienced across the business. A strong backlog <strong>of</strong> work is underpinned by<br />
projects associated with established alliance <strong>and</strong> SOC relationships, many <strong>of</strong> which have been in existence for some time.<br />
42 <strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong>
Section 4<br />
Canadian<br />
hydrocarbons<br />
market<br />
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Section 4 Canadian hydrocarbons market<br />
4.1 Canadian hydrocarbons market<br />
Colt is a leading provider <strong>of</strong> design <strong>and</strong> project services to the Canadian hydrocarbons industry. This market position is<br />
fundamental to the rationale for the Acquisition.<br />
4.1.1 Oil market overview<br />
The Canadian oil industry is large <strong>and</strong> growing with the second largest proven oil reserves in the world. According to the<br />
Canadian Association <strong>of</strong> Petroleum Producers, Canadian oil production reached 2.5 million barrels per day in 2005 <strong>and</strong> is<br />
expected to reach four million barrels per day by 2012. The vast majority <strong>of</strong> oil has been produced in Western Canada, including<br />
almost one million barrels per day from the oil s<strong>and</strong>s <strong>and</strong> the remainder from conventional <strong>and</strong> heavy oil deposits. The quantity<br />
<strong>and</strong> proportion <strong>of</strong> total production represented by the oil s<strong>and</strong>s is expected to increase. Canada is currently the eighth largest<br />
producer <strong>of</strong> crude oil <strong>and</strong> is expected to be the fourth largest producer in 2015. It is also the number one supplier <strong>of</strong> crude oil<br />
<strong>and</strong> crude oil <strong>and</strong> petroleum products to the US.<br />
Chart 11 Top 10 world crude oil producers in 2005<br />
Russia<br />
Saudi Arabia<br />
USA<br />
Iran<br />
China<br />
Mexico<br />
Norway<br />
Canada<br />
UAE<br />
Venezuela<br />
Oil s<strong>and</strong>s growth is expected to<br />
move Canada from number 8 to<br />
number 4 in the world by 2015<br />
0 1 2 3 4 5 6 7 8 9 10<br />
Million barrels per day<br />
Source:<br />
Canadian Association <strong>of</strong> Petroleum Producers, June 2006 report<br />
Chart 12 US imports <strong>of</strong> crude oil <strong>and</strong> petroleum products by country <strong>of</strong> origin<br />
Canada is the largest supplier <strong>of</strong> crude oil <strong>and</strong> petroleum products to the US.<br />
2,500<br />
Thous<strong>and</strong> barrels per day<br />
2,000<br />
1,500<br />
1,000<br />
500<br />
0<br />
Canada Mexico Saudi<br />
Arabia<br />
Venezuela Nigeria Iraq Algeria Angola Russia United<br />
Kingdom<br />
Virgin<br />
Isl<strong>and</strong>s<br />
Ecuador<br />
Kuwait<br />
Crude oil<br />
Petroleum products<br />
Source:<br />
Canadian Association <strong>of</strong> Petroleum Producers, June 2006 report<br />
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4.1.2 Oil s<strong>and</strong>s industry overview<br />
Oil s<strong>and</strong>s are an alternative source <strong>of</strong> oil that are increasingly be<strong>com</strong>ing more economic to produce due to rising oil prices, lower<br />
operating costs <strong>and</strong> a favourable fiscal regime. Oil s<strong>and</strong>s are mined to extract the very heavy oil (bitumen) which is upgraded<br />
into synthetic crude oil or refined directly into petroleum products by specialised refineries.<br />
The Canadian oil s<strong>and</strong>s industry is centred in Alberta, which has the largest known deposit <strong>of</strong> oil s<strong>and</strong>s in the world. The s<strong>and</strong>s<br />
are sourced in three main areas: Athabasca, Cold Lake, <strong>and</strong> Peace River, which <strong>com</strong>bined, cover a 140,800 km 2 area.<br />
Diagram 7 Canadian oil s<strong>and</strong>s reserves<br />
Diagram 8 Major oil s<strong>and</strong>s projects<br />
Alberta<br />
Edmonton<br />
Canada<br />
Calgary<br />
US<br />
Oil S<strong>and</strong>s Areas<br />
Athabasca<br />
Peace River<br />
Fort McMurray<br />
Cold Lake<br />
Extent <strong>of</strong> Athabasca Wabiskaw – McMurray Deposit<br />
CNRL<br />
Horizon<br />
Total<br />
Joslyn<br />
Petro Canada<br />
Mckay River<br />
Syncrude<br />
North<br />
Mine<br />
UTS<br />
Shell<br />
CNRL<br />
CNRL<br />
UTS<br />
Fort Hills<br />
Base<br />
Mine<br />
Suncor<br />
Shell<br />
Jackpine<br />
PH. 1<br />
Shell<br />
Shell<br />
Jackpine<br />
PH. 2<br />
Syncrude<br />
Suncor<br />
Exxon<br />
Mobil<br />
Aurora<br />
South<br />
Synenco<br />
Imp.<br />
Oil<br />
Kearl<br />
Husky<br />
Husky<br />
Imp. Oil<br />
Steepbank<br />
Suncor<br />
Husky<br />
Husky<br />
Suncor<br />
Firebag<br />
Source:<br />
Source:<br />
Alberta Energy & Utilities Board, Alberta’s Energy Reserves 2005<br />
Canadian Association <strong>of</strong> Petroleum Producers, The Canadian Oil S<strong>and</strong>s<br />
<strong>and</strong> Supply/Dem<strong>and</strong> Outlook 2006-2015 Opportunities <strong>and</strong> Challenges, February 2006<br />
It is estimated that approximately 1.7 trillion barrels <strong>of</strong> crude bitumen resources are located in Alberta’s oil s<strong>and</strong>s deposits.<br />
Of these resources, 300 billion barrels are ultimately recoverable <strong>and</strong> 174 billion are recoverable using current technology under<br />
today’s economic conditions.<br />
Chart 13 World oil reserves<br />
300<br />
250<br />
264<br />
Of Canada's 179 billion barrels<br />
<strong>of</strong> proven reserves, 174 billion<br />
barrels are located in oil s<strong>and</strong>s<br />
Billions <strong>of</strong> barrels<br />
200<br />
150<br />
100<br />
50<br />
179<br />
133<br />
115<br />
102<br />
`<br />
92<br />
80<br />
60<br />
39 36<br />
21<br />
0<br />
Saudi<br />
Arabia<br />
Canada Iran Iraq Kuwait Abu<br />
Dhabi<br />
Venezuela Russia Libya Nigeria United<br />
States<br />
Source:<br />
Oil & Gas Journal (2005), cited by Canadian Association <strong>of</strong> Petroleum Producers, June 2006 presentation<br />
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Section 4 Canadian hydrocarbons market continued<br />
4.1.3 Extraction process<br />
Oil s<strong>and</strong>s are extracted using either open pit mining or in-situ (in-place) methods. Open pit mining is used when the deposits are<br />
close to the surface. For all other deposits, in-situ recovery is required to produce bitumen. In-situ oil s<strong>and</strong>s production is similar<br />
to that <strong>of</strong> conventional oil production where oil is recovered through wells. However, the heavy, viscous nature <strong>of</strong> the bitumen<br />
means that it will not flow under normal conditions.<br />
Numerous in-situ technologies have been developed that apply thermal energy to heat the bitumen <strong>and</strong> allow it to flow to the<br />
well bore. These include thermal (steam) injection through vertical or horizontal wells such as cyclic steam stimulation, pressure<br />
cyclic steam drive <strong>and</strong> SAGD. The Alberta Energy & Utilities Board estimates that 80% <strong>of</strong> the total bitumen ultimately<br />
recoverable in Alberta will be with in-situ techniques.<br />
After being separated from the s<strong>and</strong>, bitumen must be upgraded before it can be refined into gasoline, diesel, jet fuel <strong>and</strong> other<br />
hydrocarbons products. The upgrading process converts the bitumen from thick, molasses-like oil to a synthetic crude oil.<br />
4.1.4 Oil s<strong>and</strong>s market trends<br />
Oil s<strong>and</strong>s production in Canada has more than doubled over the past decade <strong>and</strong> is currently around one million barrels per day.<br />
The Canadian Association <strong>of</strong> Petroleum Producers has projected that production could reach 3.5 million barrels per day by 2015<br />
<strong>and</strong> four million barrels per day from oil s<strong>and</strong>s by 2020.<br />
The Canadian National Energy Board (Canada’s Oil S<strong>and</strong>s Opportunities <strong>and</strong> Challenges to 2015: An Update, June 2006)<br />
estimates that under current market conditions, new integrated mining <strong>and</strong> SAGD production with an associated upgrader is<br />
economic at US$30 to US$35 per barrel for West Texas Intermediate crude oil (WTI). The report notes that high energy <strong>and</strong><br />
capital costs pose a risk to this range.<br />
Chart 14 shows the Canadian National Energy Board’s estimate <strong>of</strong> oil s<strong>and</strong>s capital expenditure if all planned projects are<br />
undertaken as well as the Board’s base case estimate to 2015. The base case estimate assumes WTI crude oil prices remain at<br />
or above US$50 per barrel while the All Projects case assumes all projects publicly announced to date <strong>com</strong>mence operation at<br />
their announced volume <strong>and</strong> start date.<br />
Chart 14 Estimated oil s<strong>and</strong>s capital expenditure<br />
C$Bn<br />
20<br />
18<br />
16<br />
14<br />
12<br />
10<br />
8<br />
6<br />
4<br />
2<br />
0<br />
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015<br />
All Projects case<br />
Base case<br />
Source:<br />
Canadian National Energy Board, Canada’s Oil S<strong>and</strong>s: Opportunities <strong>and</strong> Challenges to 2015: An Update, June 2006<br />
The Canadian oil s<strong>and</strong>s industry is expected to grow significantly in future years. According to the National Energy Board,<br />
C$125 billion in capital expenditures have been publicly announced for the period 2006 to 2015. Canada’s political stability<br />
<strong>and</strong> proximity to the world’s largest consumer <strong>of</strong> oil, the US, gives it a <strong>com</strong>petitive advantage over other oil-producing regions<br />
such as the Middle East <strong>and</strong> is a major contributing factor to this growth.<br />
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4.1.5 Market drivers<br />
Current influences on the development <strong>of</strong> oil s<strong>and</strong>s include:<br />
Key drivers<br />
Crude oil prices<br />
Rising global energy dem<strong>and</strong>s<br />
Technological innovations<br />
Investment climate<br />
Market development <strong>and</strong> pipelines<br />
Rising capital <strong>and</strong> skills shortages<br />
Fiscal regime<br />
Management <strong>of</strong> environmental impacts<br />
Comments<br />
The initial capital cost <strong>of</strong> the facility requires a price for WTI crude oil <strong>of</strong> US$30 to US$35<br />
per barrel (refer to 4.1.4)<br />
Dem<strong>and</strong> for oil remains buoyant, driven by China <strong>and</strong> India<br />
As the oil s<strong>and</strong>s industry develops, the adoption <strong>of</strong> new technologies is increasing<br />
Oil s<strong>and</strong>s capital expenditure in Canada is expected to grow significantly over the next decade<br />
As Canadian oil production increases, Canadian producers are exploring new markets for oil<br />
including the Midwest <strong>and</strong> Gulf Coast <strong>of</strong> the US, California <strong>and</strong> China. Producers need to develop<br />
new pipelines in order to ship crude oil to these new markets<br />
L<strong>and</strong> prices, skilled craft labour <strong>and</strong> equipment costs have increased significantly<br />
See discussion below<br />
Oil s<strong>and</strong>s refining requires high levels <strong>of</strong> energy inputs <strong>and</strong> effective management is necessary to<br />
ensure the environmental impacts are limited<br />
4.1.6 Fiscal regime<br />
The increased level <strong>of</strong> investment in the oil s<strong>and</strong>s industry has in part been driven by numerous fiscal policies <strong>of</strong> the Canadian<br />
<strong>and</strong> Albertan governments.<br />
The Province <strong>of</strong> Alberta imposes an initial royalty <strong>of</strong> 1% <strong>of</strong> the gross revenue from bitumen produced, until the producer has<br />
recovered 100% <strong>of</strong> the capital costs associated with the establishment <strong>of</strong> the plant, including an amount representing a return<br />
on capital. Subsequently, the royalty is 25% <strong>of</strong> net revenue after deducting ongoing capital expenditures.<br />
The Canadian federal government also provides capital allowances related to oil s<strong>and</strong>s developments. When a <strong>com</strong>pany makes<br />
a capital investment for a new mine or a major mine expansion, it can deduct 100% <strong>of</strong> that expenditure from taxable in<strong>com</strong>e<br />
earned from the project.<br />
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Section 4 Canadian hydrocarbons market continued<br />
4.1.7 Heavy oil industry<br />
Heavy oil is any oil having an API gravity scale between 22.3˚ <strong>and</strong> 10˚ <strong>and</strong> shares a number <strong>of</strong> the same properties as oil s<strong>and</strong>s.<br />
Like oil s<strong>and</strong>s, extraction requires the use <strong>of</strong> specialised technology, including cold heavy oil production with s<strong>and</strong>s. The main<br />
heavy oil reserves are located in Western Canada, particularly Alberta.<br />
The Canadian Association <strong>of</strong> Petroleum Producers estimates that in 2005, 476,000 barrels per day <strong>of</strong> heavy oil were produced<br />
in Canada, <strong>com</strong>pared to 577,000 barrels <strong>of</strong> conventional (light <strong>and</strong> medium) oil. As is the case for conventional oil, heavy oil<br />
production levels are expected to decline over time, placing greater importance on the oil s<strong>and</strong>s industry.<br />
4.1.8 Pipeline infrastructure<br />
If oil s<strong>and</strong>s industry activity exp<strong>and</strong>s as expected, it will require extensive investment in pipeline infrastructure to transport<br />
bitumen <strong>and</strong> synthetic crude oil to markets (particularly the US) <strong>and</strong> to provide natural gas as an energy source to the region.<br />
The increased production <strong>of</strong> oil in Western Canada, driven by oil s<strong>and</strong>s, has resulted in several proposed pipeline expansions or<br />
greenfield pipeline projects. A number <strong>of</strong> these proposals are either currently being considered by the National Energy Board,<br />
have been publicly announced or are being considered by industry. Among those publicly announced are the Mackenzie Valley<br />
pipeline <strong>and</strong> a new trans-Alaskan pipeline.<br />
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Section 5<br />
Effect <strong>of</strong> the<br />
Acquisition <strong>and</strong><br />
Entitlement Offer<br />
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Section 5 Effect <strong>of</strong> the Acquisition <strong>and</strong><br />
Entitlement Offer<br />
5.1 Rationale for the transaction<br />
<strong>WorleyParsons</strong>’ corporate strategy is focussed on the continued pr<strong>of</strong>itable development <strong>and</strong> growth <strong>of</strong> the Company <strong>and</strong> is<br />
based on the following key differentiators:<br />
... <strong>com</strong>mitted, empowered <strong>and</strong> technically capable people;<br />
... industry leadership in health, safety <strong>and</strong> environmental performance;<br />
... outst<strong>and</strong>ing operational <strong>and</strong> corporate performance;<br />
... focus on long-term contracts;<br />
... success in project delivery – large <strong>and</strong> small; <strong>and</strong><br />
... strengthen geographic presence.<br />
The acquisition <strong>of</strong> Colt is intended to <strong>com</strong>plement <strong>and</strong> support these differentiators.<br />
5.1.1 Committed, empowered <strong>and</strong> technically capable people<br />
Colt employs a number <strong>of</strong> highly skilled <strong>and</strong> experienced personnel who <strong>WorleyParsons</strong> believes will contribute to the ongoing<br />
success <strong>of</strong> <strong>WorleyParsons</strong> both in Canada <strong>and</strong> in other <strong>WorleyParsons</strong> operations. The <strong>com</strong>mitment <strong>of</strong> a number <strong>of</strong> senior Colt<br />
executives has been secured through employment services agreements with three year terms. The integration process will<br />
focus on staff retention.<br />
Over 30% <strong>of</strong> the Purchase Price will be paid to the Vendors in the form <strong>of</strong> Exchangeable Shares ensuring strong alignment <strong>of</strong><br />
interest in the Combined Group. Colt President, Larry Benke has agreed to receive 50% <strong>of</strong> his consideration in Exchangeable<br />
Shares <strong>and</strong> all active Partners will receive in excess <strong>of</strong> 27.5% <strong>of</strong> their consideration in Exchangeable Shares. An Escrow Period<br />
applies to the Exchangeable Shares, during which time the Vendors generally may not exchange or sell their Exchangeable<br />
Shares (see Section 9.3.2).<br />
It is anticipated that from Completion, key Colt executives will participate in <strong>WorleyParsons</strong>’ existing short-term incentive<br />
program. Key Colt executives will be invited to participate in the up<strong>com</strong>ing 2008 financial year long-term incentive program.<br />
Full details <strong>of</strong> these programs will be contained in the <strong>WorleyParsons</strong> 2007 Annual Report.<br />
5.1.2 Industry leadership in health, safety <strong>and</strong> environmental performance<br />
Colt has an established safety culture covering behavioural, systems <strong>and</strong> reporting requirements <strong>and</strong> has been presented with<br />
several industry safety awards in recent years. <strong>WorleyParsons</strong> believes that the safety performance <strong>of</strong> the Combined Group will<br />
not be adversely affected by the integration <strong>of</strong> Colt.<br />
5.1.3 Outst<strong>and</strong>ing operational <strong>and</strong> corporate performance<br />
Colt has a reputation for technical excellence, enduring customer relationships <strong>and</strong> successful project delivery. Following the<br />
Acquisition, the Colt business should benefit from access to <strong>WorleyParsons</strong>’ global resources <strong>and</strong> workshare methodologies,<br />
EPCM <strong>and</strong> project systems <strong>and</strong> practices. This is expected to further enhance the operational <strong>and</strong> corporate performance<br />
<strong>of</strong> Colt.<br />
5.1.4 Focus on long-term contracts<br />
Colt operates with a similar relationship contracting approach to <strong>WorleyParsons</strong>, focussing on long-term alliance <strong>and</strong> Supplier <strong>of</strong><br />
Choice contracts. Maintenance <strong>and</strong> expansion <strong>of</strong> Colt’s existing long-term contracts are key focus areas for the integration <strong>of</strong><br />
the business. <strong>WorleyParsons</strong> expects to benefit from Colt’s experience <strong>and</strong> practice in this area.<br />
It is also expected that the Combined Group will take advantage <strong>of</strong> <strong>WorleyParsons</strong>’ broad sector capabilities to extend<br />
long-term alliance <strong>and</strong> Supplier <strong>of</strong> Choice contracts, over time, to the Canadian minerals <strong>and</strong> metals <strong>and</strong> power sectors.<br />
5.1.5 Success in project delivery – large <strong>and</strong> small<br />
Colt has a strong reputation in Canada for the successful delivery <strong>of</strong> large <strong>and</strong> small projects. With the benefit <strong>of</strong> <strong>WorleyParsons</strong>’<br />
global resources, systems <strong>and</strong> relationships <strong>and</strong> Colt’s technical capabilities, the Combined Group will be in a position to execute<br />
large-scale hydrocarbons projects in Canada in its own right.<br />
5.1.6 Strengthen geographic presence<br />
The <strong>com</strong>bination <strong>of</strong> Colt with <strong>WorleyParsons</strong>’ existing North American operations will create a large <strong>and</strong> technically capable<br />
service provider to the hydrocarbons <strong>and</strong> power industries. The Acquisition will also exp<strong>and</strong> <strong>WorleyParsons</strong>’ global technical<br />
capabilities, particularly in relation to heavy oil, oil s<strong>and</strong>s, Arctic <strong>and</strong> other cold weather projects.<br />
50 <strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong>
5.2 <strong>WorleyParsons</strong>’ strategy for integration <strong>of</strong> the business<br />
5.2.1 Integration<br />
Colt is an established business which operates in business lines which are similar to, <strong>and</strong> has some <strong>com</strong>mon customers<br />
with, <strong>WorleyParsons</strong>. Colt’s contract risk pr<strong>of</strong>ile is similar to that <strong>of</strong> <strong>WorleyParsons</strong>, with a high proportion <strong>of</strong> its contracts<br />
cost-reimbursable service contracts.<br />
While <strong>WorleyParsons</strong> <strong>and</strong> Colt are both major service providers to the hydrocarbons industry, the two businesses have limited<br />
overlap within Canada. A major focus for integration will be Colt’s Calgary hydrocarbons operations <strong>and</strong> the corresponding<br />
<strong>WorleyParsons</strong> business, <strong>WorleyParsons</strong> MEG.<br />
5.2.2 Integration team<br />
<strong>WorleyParsons</strong> <strong>and</strong> Colt have established an integration team that <strong>com</strong>prises senior executives from both businesses. The<br />
transition team will have a number <strong>of</strong> objectives including:<br />
... maintaining <strong>and</strong> enhancing HSE performance;<br />
... maintaining <strong>and</strong> growing earnings in the <strong>com</strong>bined Canadian <strong>and</strong> Alaskan business;<br />
... identifying, capturing <strong>and</strong> delivering synergies;<br />
... ensuring application <strong>of</strong> <strong>WorleyParsons</strong>’ risk <strong>and</strong> governance policies;<br />
... enhancing the Combined Group’s reputation with customers; <strong>and</strong><br />
... enhancing the Combined Group’s reputation with current <strong>and</strong> prospective employees.<br />
<strong>WorleyParsons</strong> has undertaken a number <strong>of</strong> acquisitions <strong>and</strong> formations <strong>of</strong> joint ventures <strong>and</strong> has experience in executing<br />
the transition process. The transition team has identified potential synergies <strong>and</strong> is developing plans to help ensure they<br />
are realised.<br />
Colt President, Larry Benke will be responsible for the Canadian operations <strong>of</strong> the Combined Group <strong>and</strong> will report to<br />
<strong>WorleyParsons</strong> CEO, John Grill. Subject to Completion, Larry will also act as Bill Hall’s Alternate Director on the Board. The<br />
management team for the Canadian operation will be drawn from the existing management teams <strong>of</strong> <strong>WorleyParsons</strong> Canada,<br />
Colt <strong>and</strong> the <strong>WorleyParsons</strong> Group.<br />
5.2.3 <strong>WorleyParsons</strong>’ existing Canadian <strong>and</strong> Alaskan operations<br />
<strong>WorleyParsons</strong>’ existing Canadian operations consist <strong>of</strong> Calgary-based <strong>WorleyParsons</strong> MEG servicing the hydrocarbons market,<br />
<strong>WorleyParsons</strong> Komex, an environmental services business acquired in 2005 <strong>and</strong> <strong>WorleyParsons</strong> HGE, a Toronto-based minerals<br />
<strong>and</strong> metals consulting <strong>and</strong> project services business, also acquired in 2005.<br />
Colt <strong>and</strong> <strong>WorleyParsons</strong> MEG’s recognised capabilities in heavy oil <strong>and</strong> oil s<strong>and</strong>s, together, will create a significant industry<br />
presence. <strong>WorleyParsons</strong> Komex <strong>and</strong> <strong>WorleyParsons</strong> HGE will bring new capabilities to Colt’s business. <strong>WorleyParsons</strong> Komex’s<br />
capabilities are currently utilised by a number <strong>of</strong> Colt’s existing customers.<br />
<strong>WorleyParsons</strong> has extensive experience in supporting the development <strong>of</strong> the hydrocarbons market in Alaska through Parsons<br />
E&C, acquired by <strong>WorleyParsons</strong> in 2004, which has been involved in the design <strong>and</strong> project management <strong>of</strong> a number <strong>of</strong> the<br />
major developments in Alaska. The likely intention on Completion is that the Alaskan operations <strong>of</strong> Colt, conducted through the<br />
NANA/Colt joint venture, will be supported by the US operations <strong>of</strong> <strong>WorleyParsons</strong>.<br />
5.3 Purchase price allocation<br />
In accordance with Australian Accounting St<strong>and</strong>ards (AASB 3 – Business Combinations), <strong>WorleyParsons</strong> is required to allocate<br />
the cost <strong>of</strong> a business <strong>com</strong>bination by recognising Colt’s identifiable assets, liabilities <strong>and</strong> contingent liabilities at their fair<br />
values at the Completion Date. Any difference between the cost <strong>of</strong> the business <strong>com</strong>bination <strong>and</strong> net fair value acquired is<br />
accounted for as goodwill. Recognised identifiable intangible assets, such as trade names, customer relationships <strong>and</strong><br />
contracts, intellectual property, <strong>and</strong> databases/s<strong>of</strong>tware, are amortised over their estimated useful economic lives. The<br />
goodwill <strong>and</strong> identifiable intangible assets recognised will be subject to periodic impairment testing.<br />
<strong>WorleyParsons</strong> has undertaken a preliminary review <strong>of</strong> the purchase price allocation (PPA) <strong>and</strong> has made initial estimates <strong>of</strong><br />
the fair values <strong>and</strong> estimated useful economic lives <strong>of</strong> the identifiable intangible assets arising from the business <strong>com</strong>bination.<br />
The review has been limited to information available pre-Acquisition. A summary <strong>of</strong> the PPA <strong>and</strong> the associated amortisation<br />
charges expected over the next five years is set out below:<br />
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Section 5 Effect <strong>of</strong> the Acquisition <strong>and</strong><br />
Entitlement Offer continued<br />
Preliminary PPA<br />
C$m<br />
Identifiable intangible assets 122<br />
Deferred in<strong>com</strong>e tax liability arising from PPA (40)<br />
Net tangible assets 99<br />
Acquisition related expenses (4)<br />
Goodwill (balance) 858<br />
Acquisition purchase price 1,035<br />
Estimated amortisation charge for the financial years ending 30 June<br />
C$m<br />
2007 1 8<br />
2008 25<br />
2009 25<br />
2010 22<br />
2011 18<br />
2012 16<br />
Notes:<br />
1 Estimated amortisation charge from the Completion Date to 30 June 2007.<br />
The pro forma effect <strong>of</strong> the PPA estimates is included in the pro forma adjustments in Sections 5.4 <strong>and</strong> 5.6.<br />
In accordance with Australian Accounting St<strong>and</strong>ards (AASB 121 – In<strong>com</strong>e Taxes), a deferred tax liability will be recognised in<br />
relation to the amortisation <strong>of</strong> the intangible assets arising from the PPA. An estimate <strong>of</strong> Acquisition-related expenses, as<br />
noted in Section 5.4, is also included in the PPA.<br />
<strong>WorleyParsons</strong> will consider a provisional PPA, to be included in the 30 June 2007 Annual Accounts. The amortisation pr<strong>of</strong>ile is<br />
not expected to be materially different from the estimates set out above. In accordance with Australian Accounting St<strong>and</strong>ards<br />
the provisional PPA will be finalised within 12 months <strong>of</strong> the Completion Date.<br />
5.4 Effect on balance sheet<br />
Set out below is a summary <strong>of</strong> the pro forma effect <strong>of</strong> the Acquisition on <strong>WorleyParsons</strong>’ balance sheet as at 31 December<br />
2006 showing the net effect <strong>of</strong> the Acquisition <strong>of</strong> Colt <strong>and</strong> the Entitlement Offer as if the Acquisition <strong>and</strong> the Entitlement<br />
Offer had occurred at 31 December 2006:<br />
<strong>WorleyParsons</strong> Colt Pro forma <strong>WorleyParsons</strong><br />
A$m Actual Actual adjustments pro forma<br />
Assets<br />
Cash assets 98.4 5.8 (5.8) 98.4<br />
Other current assets 600.6 172.0 (8.4) 764.2<br />
Property, plant <strong>and</strong> equipment 72.6 17.5 (0.7) 89.4<br />
Intangible assets 397.6 – 1,069.2 1,466.8<br />
Investments in associates 71.7 4.7 76.4<br />
Other non-current assets 37.5 – 2.1 39.6<br />
Total assets 1,278.4 195.3 1,061.1 2,534.8<br />
Liabilities<br />
Current tax liabilities 14.6 – – 14.6<br />
Interest bearing liabilities 180.6 – 332.3 512.9<br />
Other liabilities 573.4 72.6 46.3 692.3<br />
Total liabilities 768.6 72.6 378.6 1,219.8<br />
Net assets 509.8 122.7 682.5 1,315.0<br />
52 <strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong>
Note 1 – Basis <strong>of</strong> <strong>WorleyParsons</strong> actual financial information<br />
The balance sheet <strong>of</strong> <strong>WorleyParsons</strong> as at 31 December 2006 was extracted from the consolidated financial statements <strong>of</strong><br />
<strong>WorleyParsons</strong> for the half year ended 31 December 2006 prepared in accordance with Australian Accounting St<strong>and</strong>ards on<br />
which an unqualified review opinion was issued by Ernst & Young.<br />
Note 2 – Basis <strong>of</strong> Colt actual financial information<br />
The balance sheet <strong>of</strong> Colt as at 31 October 2006 was extracted from the consolidated financial statements <strong>of</strong> Colt as at <strong>and</strong><br />
for the nine months ended 31 October 2006 prepared in Canadian dollars <strong>and</strong> in accordance with Canadian GAAP, on which<br />
an unqualified audit opinion, in accordance with Canadian GAAS, was issued by KPMG. The balance sheet has been translated<br />
by <strong>WorleyParsons</strong> into Australian dollars at one Australian dollar equals 0.913 Canadian dollars for presentation in the table.<br />
No adjustment has been made to reflect the change in the financial position <strong>of</strong> Colt for the period 1 November 2006 to<br />
31 December 2006.<br />
Note 3 – Basis <strong>of</strong> pro forma balance sheet<br />
The pro forma balance sheet <strong>of</strong> <strong>WorleyParsons</strong> as at 31 December 2006 is prepared in accordance with the measurement<br />
<strong>and</strong> recognition requirements but not the disclosure requirements <strong>of</strong> applicable accounting st<strong>and</strong>ards <strong>and</strong> other m<strong>and</strong>atory<br />
reporting requirements in Australia. The pro forma balance sheet <strong>com</strong>bines the actual balance sheets <strong>and</strong> is adjusted to<br />
incorporate the effect <strong>of</strong> the following transactions <strong>and</strong> accounting policy changes, which are expected to occur subsequent<br />
to Acquisition, as if they had occurred as at that date:<br />
... receipt <strong>of</strong> the proceeds <strong>of</strong> A$480 million from the issue <strong>of</strong> approximately 22.9 million New Shares through the Entitlement<br />
Offer;<br />
... settlement by cash <strong>of</strong> the equity raising expenses (including the underwriting fees, pr<strong>of</strong>essional fees <strong>and</strong> other <strong>of</strong>fer costs)<br />
estimated to be A$17 million, recognised as a reduction to contributed equity;<br />
... borrowing <strong>of</strong> A$333 million <strong>of</strong> external debt;<br />
... settlement by cash <strong>of</strong> the debt raising expenses estimated to be A$1 million recognised as a reduction in interest<br />
bearing liabilities;<br />
... purchase <strong>of</strong> Colt for C$1,035 million (converted to Australian dollars at one Australian dollar equals 0.913 Canadian dollars),<br />
together with the payment <strong>of</strong> Acquisition-related expenses, estimated to be A$4 million;<br />
... distribution to the partners <strong>of</strong> Colt to the agreed target net asset value <strong>of</strong> C$91.7 million as at 31 January 2007;<br />
... pr<strong>of</strong>its for the period from 1 February to 7 March 2007 increase the fair value <strong>of</strong> net assets acquired;<br />
... restatement to equity account for an associate that was proportionately consolidated under Canadian GAAP: no other<br />
adjustments are required to restate Colt’s financial information from Canadian GAAP to Australian Accounting St<strong>and</strong>ards;<br />
... preliminary allocation <strong>of</strong> the purchase price between identifiable intangible assets <strong>of</strong> C$122 million <strong>and</strong> goodwill <strong>of</strong><br />
C$858 million as set out in Section 5.3; <strong>and</strong><br />
... application <strong>of</strong> deferred tax to the Colt balance sheet <strong>and</strong> pro forma adjustments.<br />
5.5 Issued capital<br />
The effect <strong>of</strong> the Entitlement Offer on <strong>WorleyParsons</strong>’ issued capital is set out in the table below. The table shows the impact<br />
as though the Acquisition had already occurred <strong>and</strong> been partially funded by the Entitlement Offer (assumed to be<br />
A$480 million).<br />
Number <strong>of</strong> Ordinary Shares on issue<br />
At 14 February 2007 205,672,308<br />
New Shares issued in the Entitlement Offer 22,852,479<br />
On <strong>com</strong>pletion <strong>of</strong> Entitlement Offer 228,524,787<br />
Exchangeable Shares issued to Vendors 12,226,444<br />
Ordinary Shares <strong>and</strong> Exchangeable Shares on Issue on <strong>com</strong>pletion <strong>of</strong> the Acquisition 240,751,231<br />
<strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong><br />
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Section 5 Effect <strong>of</strong> the Acquisition <strong>and</strong><br />
Entitlement Offer continued<br />
5.6 Effect on in<strong>com</strong>e statement<br />
The pro forma in<strong>com</strong>e statements <strong>of</strong> Colt <strong>and</strong> <strong>WorleyParsons</strong> presented below are prepared in accordance with the<br />
measurement <strong>and</strong> recognition requirements but not the disclosure requirements <strong>of</strong> applicable accounting st<strong>and</strong>ards <strong>and</strong> other<br />
m<strong>and</strong>atory reporting requirements in Australia.<br />
Adjustments have been included in this Section to give effect to the transactions associated with the Entitlement Offer <strong>and</strong><br />
Acquisition as contemplated in the Document as if they had occurred at 1 January 2006. This information is provided for<br />
illustrative purposes only <strong>and</strong> is not represented as being indicative <strong>of</strong> <strong>WorleyParsons</strong>’ view on future financial performance.<br />
5.6.1 Colt pro forma financial information<br />
Colt’s pro forma results for the year ended 31 January 2007 are set out in the table below.<br />
Pro forma adjustments<br />
Colt Colt Colt Colt Colt<br />
9 months to 3 months to St<strong>and</strong>-alone other 12 months to<br />
31 October 2006 31 January 2007 pro forma pro forma 31 January 2007<br />
C$m Actual Estimate adjustments adjustments pro forma<br />
Revenue 518.9 187.8 (23.2) – 683.5<br />
EBITDA 79.4 27.1 (3.8) 3.6 106.3<br />
Depreciation (5.4) (2.1) – – (7.5)<br />
Amortisation – – – – –<br />
EBIT 74.0 25.0 (3.8) 3.6 98.8<br />
Interest (0.5) (0.1) – – (0.6)<br />
Tax (0.8) (0.3) 1.1 (32.1) (32.1)<br />
Net pr<strong>of</strong>it 72.7 24.6 (2.7) (28.5) 66.1<br />
Note 1 – Basis <strong>of</strong> preparation <strong>of</strong> in<strong>com</strong>e statement<br />
Colt’s pro forma results for the year ended 31 January 2007 have been <strong>com</strong>piled based on:<br />
... Colt actual – the consolidated financial statements <strong>of</strong> Colt as at <strong>and</strong> for the nine months ended 31 October 2006 prepared<br />
in Canadian dollars <strong>and</strong> in accordance with Canadian GAAP, on which an unqualified audit opinion, in accordance with<br />
Canadian GAAS, was issued by KPMG.<br />
... Colt estimate – an estimate <strong>of</strong> the results for the three months ended 31 January 2007 prepared by Colt in accordance with<br />
Canadian GAAP. These estimated results have been reviewed by the Directors <strong>of</strong> <strong>WorleyParsons</strong> but have not been subject<br />
to audit.<br />
Note 2 – Explanation <strong>of</strong> Colt st<strong>and</strong>-alone pro forma adjustments to in<strong>com</strong>e statement<br />
Colt st<strong>and</strong>-alone pro forma adjustments are those adjustments described in Section 3.10 to arrive at Adjusted EBITDA to:<br />
– eliminate in<strong>com</strong>e <strong>and</strong> gains on sale <strong>of</strong> investments;<br />
– equity account associates in accordance with Australian Accounting St<strong>and</strong>ards that were proportionately consolidated<br />
under Canadian GAAP; <strong>and</strong><br />
– include additional salary expense that would be required were Colt not structured as a partnership.<br />
Note 3 – Explanation <strong>of</strong> Colt other pro forma adjustments<br />
Colt other pro forma adjustments are those adjustments made to items <strong>of</strong> revenue <strong>and</strong> expense to give effect to the<br />
transactions associated with the Acquisition <strong>and</strong> for differences in accounting policies are as follows:<br />
– inclusion <strong>of</strong> a pro forma tax expense at 33.5% for the Colt Canadian business that was not liable for Canadian federal or<br />
provincial taxes pre-Acquisition;<br />
– removal <strong>of</strong> pre-Acquisition Caravel <strong>and</strong> non-partner pr<strong>of</strong>it sharing; <strong>and</strong><br />
– inclusion <strong>of</strong> post-Acquisition incentive plan for Colt personnel.<br />
No other adjustments are required to restate Colt’s financial information from Canadian GAAP to Australian Accounting<br />
St<strong>and</strong>ards.<br />
54 <strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong>
5.6.2 Pro forma financial information<br />
The following table provides a summary <strong>of</strong> the effect <strong>of</strong> the Acquisition for the pro forma period.<br />
<strong>WorleyParsons</strong> Colt Pro forma <strong>WorleyParsons</strong><br />
A$m Actual pro forma adjustments pro forma<br />
Revenue 2,803.6 796.6 – 3,600.2<br />
EBITDA 259.7 123.8 – 383.5<br />
Depreciation (16.7) (8.7) – (25.4)<br />
Amortisation (5.1) – (28.3) (33.4)<br />
EBIT 237.9 115.1 (28.3) 324.7<br />
Interest (5.2) (0.7) (18.5) (24.4)<br />
Tax (58.8) (37.4) 17.1 (79.1)<br />
Net pr<strong>of</strong>it after tax 173.9 77.0 (29.7) 221.2<br />
Minority interest (1.9) – – (1.9)<br />
Net pr<strong>of</strong>it 172.0 77.0 (29.7) 219.3<br />
Note 1 – Basis <strong>of</strong> <strong>WorleyParsons</strong> actual financial information<br />
The In<strong>com</strong>e Statement <strong>of</strong> <strong>WorleyParsons</strong> for the 12 months ended 31 December 2006 was <strong>com</strong>piled from the financial<br />
statements for the full year ended 30 June 2006 audited by Ernst & Young <strong>and</strong> the half year financial statements for the<br />
six months ended 31 December 2005 <strong>and</strong> 31 December 2006 reviewed by Ernst & Young.<br />
Note 2 – Basis <strong>of</strong> preparation <strong>of</strong> Colt financial information<br />
The estimated results for the 12 months ended 31 January 2007 have been extracted from Section 5.6.1 translated into<br />
Australian dollars at the average exchange rate <strong>of</strong> one Australian dollar equals 0.858 Canadian dollars.<br />
Note 3 – Basis <strong>of</strong> preparation <strong>of</strong> the pro forma In<strong>com</strong>e Statement<br />
The pro forma In<strong>com</strong>e Statement represents the <strong>com</strong>bination <strong>of</strong> the actual In<strong>com</strong>e Statement <strong>of</strong> <strong>WorleyParsons</strong>, as described<br />
in Note 1 above, <strong>and</strong> the pro forma In<strong>com</strong>e Statement <strong>of</strong> Colt, as described in Note 2 above, adjusted to give effect to the<br />
transactions associated with the Acquisition as set out below:<br />
... inclusion <strong>of</strong> interest expense <strong>and</strong> tax effect associated with the post-Acquisition funding structure assuming an average<br />
interest rate <strong>of</strong> 5.11%; <strong>and</strong><br />
... inclusion <strong>of</strong> amortisation <strong>of</strong> intangible assets <strong>and</strong> tax effect identified as part <strong>of</strong> the preliminary PPA, determined in Section 5.3.<br />
5.7 Effect on earnings per share<br />
5.7.1 Pro forma effect<br />
Based upon the <strong>WorleyParsons</strong> pro forma Combined Group in<strong>com</strong>e statement incorporating the 12 months ended 31 December<br />
2006 for <strong>WorleyParsons</strong> <strong>and</strong> the 12 months ended 31 January 2007 for Colt, the Acquisition would have been approximately<br />
21.0% EPS accretive (pre-synergies, amortisation <strong>and</strong> additional corporate costs) relative to <strong>WorleyParsons</strong> on a st<strong>and</strong>-alone basis.<br />
In accordance with Australian Accounting St<strong>and</strong>ards (AASB 133 - Earnings Per Share), the calculation <strong>of</strong> pro forma EPS accretion<br />
includes adjustment for the value <strong>of</strong> the renounceable Entitlements <strong>of</strong> $7.00 per share determined by the Institutional Bookbuild.<br />
Approximately 3% <strong>of</strong> the pro forma EPS accretion is attributable to the value <strong>of</strong> the renounceable Entitlements. This amount is<br />
determined by reference to the pro forma in<strong>com</strong>e statement in Section 5.6.2, <strong>and</strong> is therefore subject to the same limitations. It is<br />
not represented as being indicative <strong>of</strong> <strong>WorleyParsons</strong>’ view on the future financial performance <strong>of</strong> <strong>WorleyParsons</strong>.<br />
<strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong><br />
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Section 5 Effect <strong>of</strong> the Acquisition <strong>and</strong><br />
Entitlement Offer continued<br />
5.7.2 Expected effect<br />
The Directors believe the Combined Group will be capable <strong>of</strong> producing improved financial returns <strong>com</strong>pared to each <strong>of</strong><br />
<strong>WorleyParsons</strong> <strong>and</strong> Colt on a st<strong>and</strong>-alone basis. However, this conclusion is based on various assumptions which can influence<br />
the future performance <strong>of</strong> <strong>WorleyParsons</strong> following the Acquisition. Should any <strong>of</strong> these assumptions change, it may result in a<br />
materially positive or negative impact on the future performance <strong>of</strong> <strong>WorleyParsons</strong>. The main factors that will impact future<br />
performance are summarised below:<br />
... Colt’s financial performance since 2004 has been strong. <strong>WorleyParsons</strong> believes the prospects for Colt <strong>and</strong> <strong>WorleyParsons</strong><br />
following the Acquisition remain strong <strong>and</strong> that this will be reflected in the financial performance <strong>of</strong> the Combined Group;<br />
... <strong>WorleyParsons</strong> expects the acquisition <strong>of</strong> Colt could produce material synergies for the Combined Group over time through<br />
enhanced capability <strong>and</strong> sector expansion;<br />
... <strong>WorleyParsons</strong> anticipates there will be one-<strong>of</strong>f costs associated with establishing a detailed integration plan following the<br />
Acquisition. <strong>WorleyParsons</strong>’ initial assessment is that these costs will be in the order <strong>of</strong> $3.7 million ($2.6 million net <strong>of</strong> tax),<br />
although the magnitude <strong>of</strong> such costs cannot be predicted with precision (as described in Section 8.2.8);<br />
... <strong>WorleyParsons</strong> expects there may be incremental corporate expenditure required post-Acquisition. Although a detailed<br />
integration plan has not yet been <strong>com</strong>pleted, a preliminary assessment considers that additional corporate expenditure,<br />
having regard to potential cost savings, will not be material;<br />
... <strong>WorleyParsons</strong> proposes to fund the Acquisition through a <strong>com</strong>bination <strong>of</strong> ordinary equity, the issue <strong>of</strong> Exchangeable Shares<br />
<strong>and</strong> debt. The funding structure is described in detail in Sections 9.1 <strong>and</strong> 9.2. The average interest rate on the debt<br />
<strong>com</strong>ponent is expected to be approximately 5.11% for the year ending 30 June 2007, but this cannot be predicted with<br />
precision;<br />
... the Canadian pro forma tax rate is 33.5%. This is higher than the current effective tax rate <strong>of</strong> <strong>WorleyParsons</strong> Group. Various<br />
factors may affect the tax rate over time such as changes in legislation <strong>and</strong> accounting treatments; <strong>and</strong><br />
... the Effective Date for the Acquisition is 1 February 2007, from which time the cash flows <strong>of</strong> Colt will accrue to<br />
<strong>WorleyParsons</strong>. However, in accordance with Australian Accounting St<strong>and</strong>ards the pr<strong>of</strong>its <strong>of</strong> Colt will not accrue to<br />
<strong>WorleyParsons</strong> until the Completion Date. Pr<strong>of</strong>its realised from the Effective Date to the Completion Date will be included in<br />
the fair value <strong>of</strong> net assets acquired.<br />
5.8 Dividends<br />
It is the intention <strong>of</strong> the Directors to make regular, half yearly dividend payments to Shareholders subject to available pr<strong>of</strong>its,<br />
capital growth requirements, working capital requirements <strong>and</strong> the level <strong>of</strong> borrowings.<br />
The intention is that generally in the order <strong>of</strong> 60% to 70% <strong>of</strong> <strong>WorleyParsons</strong>’ full year net pr<strong>of</strong>it after tax will be available for<br />
distribution as dividends, with the balance being retained for funding ongoing growth. Dividends will be franked to the extent<br />
franking credits are available.<br />
To the extent that an increasing proportion <strong>of</strong> <strong>WorleyParsons</strong>’ earnings are derived outside Australia, it is likely that future<br />
dividends will be franked at a lower rate than has previously been the case.<br />
56 <strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong>
Section 6<br />
Independent<br />
Accountant’s Report<br />
<strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong><br />
57
14 February 2007<br />
The Directors<br />
<strong>WorleyParsons</strong> Limited<br />
Level 7, 116 Miller Street<br />
NORTH SYDNEY NSW 2060<br />
Dear Sirs<br />
Independent Accountant’s Report<br />
1. Introduction<br />
We have prepared this Independent Accountant’s Report (Report) at the request <strong>of</strong> the Directors for inclusion in the <strong>Prospectus</strong><br />
to be dated on or about 14 February 2007 relating to the <strong>of</strong>fer <strong>of</strong> New Shares.<br />
Unless otherwise specified, expressions defined in the <strong>Prospectus</strong> have the same meaning in this Report.<br />
2. Background<br />
On 8 February 2007, <strong>WorleyParsons</strong> Limited <strong>and</strong> its controlled entities (<strong>WorleyParsons</strong>) announced it had entered into an<br />
agreement to acquire all the issued shares in Colt Engineering (Colt), a Canadian design <strong>and</strong> project services partnership, for<br />
C$1,035 million. <strong>WorleyParsons</strong> proposes an Entitlement Offer <strong>of</strong> 22.9 million New Shares to raise $480 million to partly fund<br />
the acquisition <strong>of</strong> Colt.<br />
3. Scope<br />
We have been requested to prepare an Independent Accountant’s report covering the following financial information:<br />
(a) the Historical Financial Information <strong>of</strong> <strong>WorleyParsons</strong>, <strong>com</strong>prising:<br />
– the Actual Balance Sheet <strong>of</strong> <strong>WorleyParsons</strong> as at 31 December 2006 set out in Section 5.4 <strong>of</strong> the <strong>Prospectus</strong>; <strong>and</strong><br />
– the Actual In<strong>com</strong>e Statement <strong>of</strong> WorleyParsns for the 12 months ended 31 December 2006 as set out in Section 5.6.2<br />
<strong>of</strong> the <strong>Prospectus</strong>,<br />
(b) the Pro forma Financial Information <strong>of</strong> <strong>WorleyParsons</strong>, <strong>com</strong>prising:<br />
– the Pro forma Balance Sheet <strong>of</strong> <strong>WorleyParsons</strong> as at 31 December 2006 as set out in Section 5.4 <strong>of</strong> the <strong>Prospectus</strong><br />
which assumes Completion <strong>of</strong> the transactions as set out in Section 9.3 <strong>of</strong> the <strong>Prospectus</strong> as if they had occurred on<br />
31 December 2006 <strong>and</strong> the pro forma adjustments set out in Section 5.4 <strong>of</strong> the <strong>Prospectus</strong>; <strong>and</strong><br />
– the Pro forma In<strong>com</strong>e Statement <strong>of</strong> <strong>WorleyParsons</strong> for the 12 months ended 31 December 2006 as set out in<br />
Section 5.6.2 <strong>of</strong> the <strong>Prospectus</strong>, which assumes Completion <strong>of</strong> the transactions as set out in Section 9.3 <strong>of</strong> the<br />
<strong>Prospectus</strong> as if they had occurred on 1 January 2006 <strong>and</strong> the adjustments set out in Sections 5.6.1 <strong>and</strong> 5.6.2 <strong>of</strong> the<br />
<strong>Prospectus</strong>.<br />
The Actual Balance Sheet <strong>of</strong> Colt as at 31 October 2006 set out in Section 5.4 <strong>of</strong> the <strong>Prospectus</strong> <strong>and</strong> the Actual In<strong>com</strong>e<br />
Statement <strong>of</strong> Colt for the nine months ended 31 October 2006 as set out in Section 5.6.1 <strong>of</strong> the <strong>Prospectus</strong> (the Historical<br />
Financial Information <strong>of</strong> Colt) have been <strong>com</strong>piled based on the financial statements <strong>of</strong> Colt prepared in Canadian dollars <strong>and</strong> in<br />
accordance with Canadian GAAP, on which an unqualified audit opinion, in accordance with Canadian GAAS, was issued by<br />
KPMG.<br />
Section 5.6.1 <strong>of</strong> the <strong>Prospectus</strong> includes estimated results <strong>of</strong> Colt for the three months to 31 January 2007 (the Colt<br />
estimated results to 31 January 2007). The Directors are responsible for determining the appropriateness <strong>of</strong> the Colt estimated<br />
results to 31 January 2007.<br />
The Directors have prepared <strong>and</strong> are responsible for the preparation <strong>and</strong> presentation <strong>of</strong> the Historical Financial Information <strong>of</strong><br />
<strong>WorleyParsons</strong>, the Historical Financial Information <strong>of</strong> Colt, the Colt estimated results to 31 January 2007, <strong>and</strong> the Pro forma<br />
Financial Information <strong>of</strong> <strong>WorleyParsons</strong> <strong>and</strong> have determined that the accounting policies are appropriate. We disclaim any<br />
responsibility for any reliance on this Report or on the financial information to which it relates for any purposes other than that<br />
for which it was prepared. This Report should be read in conjunction with the full <strong>Prospectus</strong>.<br />
Review <strong>of</strong> Historical Financial Information <strong>of</strong> <strong>WorleyParsons</strong><br />
Ernst & Young is the auditor <strong>of</strong> <strong>WorleyParsons</strong> <strong>and</strong> has audited the consolidated financial report <strong>of</strong> <strong>WorleyParsons</strong> for the year<br />
ended 30 June 2006 <strong>and</strong> reviewed the consolidated financial reports for the half years ended 31 December 2005 <strong>and</strong><br />
31 December 2006. We have expressed an unqualified audit opinion <strong>and</strong> unqualified review statements, respectively, on those<br />
financial reports.<br />
58 <strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong>
The Directors have <strong>com</strong>piled an In<strong>com</strong>e Statement <strong>of</strong> <strong>WorleyParsons</strong> for the 12 months ended 31 December 2006 by<br />
subtracting the in<strong>com</strong>e statement for the half year ended 31 December 2005 from the year ended 30 June 2006 <strong>and</strong> adding<br />
the half year ended 31 December 2006.<br />
We have conducted an independent review <strong>of</strong> the Historical Financial Information <strong>of</strong> <strong>WorleyParsons</strong> in order to state whether<br />
on the basis <strong>of</strong> the procedures described, anything has <strong>com</strong>e to our attention that would cause us to believe that the Historical<br />
Financial Information <strong>of</strong> <strong>WorleyParsons</strong> is not prepared in accordance with the measurement <strong>and</strong> recognition requirements (but<br />
not all <strong>of</strong> the disclosure requirements) <strong>of</strong> applicable Accounting St<strong>and</strong>ards <strong>and</strong> other m<strong>and</strong>atory pr<strong>of</strong>essional reporting<br />
requirements in Australia.<br />
Our review has been conducted in accordance with Australian Auditing St<strong>and</strong>ards applicable to review engagements. These<br />
procedures do not provide all the evidence that would be required in an audit, thus the level <strong>of</strong> assurance provided is less than<br />
that given in an audit. We have not performed an audit <strong>and</strong>, accordingly, we do not express an audit opinion on the Historical<br />
Financial Information <strong>of</strong> <strong>WorleyParsons</strong>.<br />
Review <strong>of</strong> Pro forma Financial Information <strong>of</strong> <strong>WorleyParsons</strong><br />
We have conducted an independent review <strong>of</strong> the Pro forma Financial Information <strong>of</strong> <strong>WorleyParsons</strong> in order to state whether<br />
on the basis <strong>of</strong> the procedures described, anything has <strong>com</strong>e to our attention that would cause us to believe that the Pro forma<br />
Financial Information <strong>of</strong> <strong>WorleyParsons</strong> is not prepared in accordance with the measurement <strong>and</strong> recognition requirements<br />
(but not all <strong>of</strong> the disclosure requirements) <strong>of</strong> applicable Accounting St<strong>and</strong>ards <strong>and</strong> other m<strong>and</strong>atory pr<strong>of</strong>essional reporting<br />
requirements in Australia to reflect the pro forma transactions as set out in Sections 5.4, 5.6.1 <strong>and</strong> 5.6.2 <strong>of</strong> the <strong>Prospectus</strong>.<br />
Our review has been conducted in accordance with Australian Auditing St<strong>and</strong>ards applicable to review engagements <strong>and</strong> has<br />
been limited to reading <strong>of</strong> relevant Board minutes, reading <strong>of</strong> contracts <strong>and</strong> other legal documents, inquiries <strong>of</strong> management<br />
personnel, <strong>and</strong> analytical procedures applied to the financial data.<br />
We have also determined whether the pro forma transactions form a reasonable basis for the preparation <strong>of</strong> the Pro forma<br />
Financial Information <strong>of</strong> <strong>WorleyParsons</strong>.<br />
These procedures do not provide all the evidence that would be required in an audit, thus the level <strong>of</strong> assurance provided is less<br />
than that given in an audit. We have not performed an audit <strong>and</strong>, accordingly, we do not express an audit opinion on the<br />
Pro forma Financial Information <strong>of</strong> <strong>WorleyParsons</strong>.<br />
4. Review Statements<br />
Historical Financial Information <strong>of</strong> <strong>WorleyParsons</strong><br />
Based on our review, which was not an audit, nothing has <strong>com</strong>e to our attention which would cause us to believe the Historical<br />
Financial Information <strong>of</strong> <strong>WorleyParsons</strong> is not presented in accordance with the measurement <strong>and</strong> recognition requirements<br />
(but not all the disclosure requirements) <strong>of</strong> applicable Accounting St<strong>and</strong>ards <strong>and</strong> other m<strong>and</strong>atory pr<strong>of</strong>essional reporting<br />
requirements in Australia.<br />
Pro forma Financial Information <strong>of</strong> <strong>WorleyParsons</strong><br />
Based on our review, which was not an audit, nothing has <strong>com</strong>e to our attention which would cause us to believe the Pro forma<br />
Financial Information <strong>of</strong> <strong>WorleyParsons</strong> is not presented in accordance with the measurement <strong>and</strong> recognition requirements<br />
(but not all <strong>of</strong> the disclosure requirements) <strong>of</strong> applicable Accounting St<strong>and</strong>ards <strong>and</strong> other m<strong>and</strong>atory pr<strong>of</strong>essional reporting<br />
requirements in Australia.<br />
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5. Subsequent Events<br />
Apart from the matters dealt with in this Report <strong>and</strong> having regard to the scope <strong>of</strong> our Report, to the best <strong>of</strong> our knowledge<br />
<strong>and</strong> belief, there have been no material transactions or events outside the ordinary course <strong>of</strong> business <strong>of</strong> <strong>WorleyParsons</strong><br />
subsequent to 31 December 2006 that have <strong>com</strong>e to our attention which require <strong>com</strong>ment on or adjustment to, the<br />
information referred to in our Report or that would cause such information to be misleading or deceptive.<br />
6. Disclosure<br />
Ernst & Young does not have any pecuniary interests that could reasonably be regarded as being capable <strong>of</strong> affecting its ability<br />
to give an unbiased opinion in this matter. Ernst & Young provides audit <strong>and</strong> other limited non-audit services to <strong>WorleyParsons</strong>,<br />
<strong>and</strong> will receive a pr<strong>of</strong>essional fee for the preparation <strong>of</strong> this report.<br />
<strong>WorleyParsons</strong> has agreed to indemnify <strong>and</strong> hold harmless Ernst & Young <strong>and</strong> its employees from any claims arising out <strong>of</strong><br />
misstatement or omission in any material or information supplied by <strong>WorleyParsons</strong>.<br />
Consent to the inclusion <strong>of</strong> the Independent Accountant’s report in the <strong>Prospectus</strong> in the form <strong>and</strong> context in which it appears,<br />
has been given. At the date <strong>of</strong> this Report, this consent has not been withdrawn.<br />
Yours faithfully<br />
Ernst & Young<br />
Jeff Chamberlain<br />
Partner<br />
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Section 7<br />
Board <strong>of</strong> Directors<br />
<strong>and</strong> executive group<br />
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Section 7 Board <strong>of</strong> Directors <strong>and</strong> executive group<br />
7.1 Board <strong>of</strong> Directors<br />
<strong>WorleyParsons</strong>’ Board <strong>of</strong> Directors is <strong>com</strong>prised as follows:<br />
Ron McNeilly<br />
Chairman <strong>and</strong> Non-Executive Director<br />
John Grill<br />
Chief Executive Officer<br />
David Housego<br />
Chief Financial Officer<br />
Grahame Campbell<br />
Non-Executive Director<br />
Erich Fraunschiel<br />
Non-Executive Director<br />
John Green<br />
Non-Executive Director<br />
Bill Hall<br />
Managing Director<br />
Larry Benke<br />
Proposed Alternate Director<br />
to Bill Hall<br />
Eric Gwee Teck Hai<br />
Non-Executive Director<br />
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Ron McNeilly<br />
Chairman <strong>and</strong> Non-Executive Director<br />
Ron is Chairman <strong>of</strong> the Board <strong>and</strong> a member <strong>of</strong> the Nominations <strong>and</strong><br />
Remuneration Committee. Ron is currently the Deputy Chairman<br />
<strong>of</strong> BlueScope Steel Limited (previously BHP Steel) <strong>and</strong> has over<br />
30 years’ experience in the steel industry. Ron joined BHP Billiton in<br />
1962 <strong>and</strong> has held various senior positions including Chief Executive<br />
Officer <strong>of</strong> BHP Steel. Ron is the Chairman <strong>of</strong> Melbourne Business<br />
School Limited <strong>and</strong> a Director <strong>of</strong> Alumina Limited. He is a former<br />
Chairman <strong>of</strong> Ausmelt Limited <strong>and</strong> a former Director <strong>of</strong> GH Michell<br />
Holdings Pty Limited, QCT Resources <strong>and</strong> Tubemakers <strong>of</strong> Australia.<br />
John Grill<br />
Chief Executive Officer<br />
John joined ESSO Australia in 1968 <strong>and</strong> in 1971 became Chief<br />
Executive <strong>of</strong> the entity that ultimately became <strong>WorleyParsons</strong><br />
Limited, Wholohan Grill <strong>and</strong> Partners. This specialised consulting<br />
practice acquired the business <strong>of</strong> Worley Engineering Pty Limited in<br />
Australia in 1987. Following group restructuring, in 2002 Worley<br />
Group Limited listed on the Australian Stock Exchange. In 2004,<br />
Worley Group Limited acquired Parsons E&C, a US-based global project<br />
services <strong>com</strong>pany, <strong>and</strong> changed its name to <strong>WorleyParsons</strong> Limited.<br />
John has personal expertise in every aspect <strong>of</strong> project delivery for<br />
projects in the resources <strong>and</strong> energy industries. He has been directly<br />
involved with most <strong>of</strong> <strong>WorleyParsons</strong>’ major clients <strong>and</strong> remains<br />
closely involved at board level with <strong>WorleyParsons</strong>’ joint ventures.<br />
David Housego<br />
Chief Financial Officer<br />
David joined the Company in July 1999. He led the corporate<br />
reorganisation <strong>and</strong> subsequent Initial Public Offering <strong>and</strong> listing on<br />
ASX <strong>of</strong> Worley Group Limited (now <strong>WorleyParsons</strong> Limited) in 2002<br />
<strong>and</strong> represents <strong>WorleyParsons</strong> on a number <strong>of</strong> its joint venture<br />
<strong>com</strong>panies. David’s finance experience covers business development,<br />
corporate strategic planning, investment evaluation, investor relations<br />
<strong>and</strong> management accounting systems development. Prior to joining<br />
the Group, David held senior finance roles with Coca-Cola Amatil.<br />
Previously, he worked for a number <strong>of</strong> firms in the UK <strong>and</strong> held a<br />
variety <strong>of</strong> accounting positions with AAP Reuters <strong>and</strong> IBM Australia.<br />
Grahame Campbell<br />
Non-Executive Director<br />
Grahame is a member <strong>of</strong> the Audit <strong>and</strong> Risk Committee <strong>and</strong> the<br />
Nominations <strong>and</strong> Remuneration Committee. Grahame was Managing<br />
Director <strong>of</strong> engineering <strong>and</strong> project management <strong>com</strong>pany CMPS&F<br />
from 1987 to 1995. Grahame has over 30 years’ experience in the<br />
management <strong>of</strong> major Australian <strong>and</strong> <strong>of</strong>fshore infrastructure projects<br />
including oil, gas, road, rail, mining <strong>and</strong> minerals projects. Grahame<br />
is currently a Director <strong>of</strong> Iluka Resources Limited <strong>and</strong> the Macro<br />
Engineering Council (University <strong>of</strong> Sydney). Grahame is a past<br />
President <strong>of</strong> the Association <strong>of</strong> Consulting Engineers Australia <strong>and</strong><br />
the Australian Pipeline Industry Association. Prior to his appointment<br />
as a Non-Executive Director <strong>of</strong> <strong>WorleyParsons</strong> on listing in 2002,<br />
Grahame was a member <strong>of</strong> the advisory board for four years.<br />
Erich Fraunschiel<br />
Non-Executive Director<br />
Erich is Chairman <strong>of</strong> the Audit <strong>and</strong> Risk Committee. Erich is a Director<br />
<strong>of</strong> Woodside Petroleum Limited, West Australian Newspapers<br />
Holdings Limited <strong>and</strong> Rabobank Australia Limited. He is Chairman <strong>of</strong><br />
Wesfarmers Federation Insurance Limited, Lumley General Insurance<br />
Limited <strong>and</strong> Australian International Insurance Limited (all three<br />
being part <strong>of</strong> the Wesfarmers Group), <strong>and</strong> West Australian Opera Inc.<br />
Erich’s early business career was in the petroleum marketing <strong>and</strong><br />
management consulting industries. In 1981, he joined the Australian<br />
Industry Development Corporation where he was involved in project<br />
lending, investment banking <strong>and</strong> venture capital investment. From<br />
1984, he held various senior positions within the Wesfarmers Group.<br />
From 1992 until his retirement in July 2002 he was Executive Director<br />
<strong>and</strong> Chief Financial Officer <strong>of</strong> that group.<br />
John Green<br />
Non-Executive Director<br />
John is a member <strong>of</strong> the Audit <strong>and</strong> Risk Committee <strong>and</strong> the<br />
Nominations <strong>and</strong> Remuneration Committee. John is a Company Director,<br />
investor <strong>and</strong> writer. Until August 2006, he was an investment banker<br />
at Macquarie Bank, where he was an Executive Director for 13 years.<br />
His pr<strong>of</strong>essional career before investment banking was 17 years in<br />
law, including as a partner in law firms Freehills <strong>and</strong> Dawson Waldron.<br />
Prior to his appointment as a Non-Executive Director <strong>of</strong><br />
<strong>WorleyParsons</strong> on listing in 2002, John was a member <strong>of</strong> the advisory<br />
board for nine years prior to listing, including a period as its Chairman.<br />
Bill Hall<br />
Managing Director<br />
Bill joined the Board in 2004 following the Company’s acquisition<br />
<strong>of</strong> Parsons E&C. Bill was with the Parsons Group for 25 years. He<br />
became Chairman <strong>and</strong> CEO <strong>of</strong> Parsons Energy & Chemicals Group Inc.<br />
in 2002. Prior to this position he served as President <strong>of</strong> Parsons<br />
Energy & Chemicals Group Inc. (1997-2001), President <strong>of</strong> The Ralph<br />
M. Parsons Company (1992-1995), <strong>and</strong> Senior Vice President <strong>and</strong><br />
Manager <strong>of</strong> the Petroleum & Chemical (P&C) Division with the<br />
<strong>com</strong>pany (1989-1991). Bill has 39 years’ experience in the global<br />
engineering field, holding a number <strong>of</strong> key project <strong>and</strong> other US <strong>and</strong><br />
international management positions with Parsons E&C. Bill has<br />
Bachelor <strong>and</strong> Masters degrees in Chemical Engineering at Virginia<br />
Polytechnic Institute <strong>and</strong> has <strong>com</strong>pleted the Executive Program at<br />
Stanford University. He is also on the Board <strong>of</strong> Directors <strong>of</strong> the<br />
US-Saudi Arabian Business Council.<br />
Larry Benke<br />
Proposed Alternate Director to Bill Hall<br />
Larry joined Colt in Edmonton as a design engineer in 1977 <strong>and</strong> has<br />
undertaken engineering design, project management <strong>and</strong> other<br />
management roles within the business. In 1988, Larry established the<br />
Toronto <strong>and</strong> Sarnia <strong>of</strong>fices as General Manager before returning to<br />
Calgary in 1999 as President <strong>of</strong> Colt. He has been successful in<br />
leading Colt through a period <strong>of</strong> substantial growth <strong>and</strong> expansion<br />
into the new disciplines <strong>of</strong> pipelines, power generation <strong>and</strong> geomatics.<br />
Larry graduated from the University <strong>of</strong> Alberta with a Bachelor <strong>of</strong><br />
Science in Electrical Engineering (Honours St<strong>and</strong>ing).<br />
It is the intention <strong>of</strong> the Board that subsequent to Completion <strong>of</strong> the<br />
Acquisition Larry Benke, President <strong>of</strong> Colt, will join the Board as Bill<br />
Hall’s alternate Director.<br />
Eric Gwee Teck Hai<br />
Non-Executive Director<br />
Eric joined the Board in February 2005 <strong>and</strong> is the Chairman <strong>of</strong> the<br />
Nominations <strong>and</strong> Remuneration Committee. Eric is a Singaporean<br />
national with extensive international experience in the hydrocarbons<br />
<strong>and</strong> power industries, including a career spanning more than 31 years<br />
with the ExxonMobil Group. Eric is currently a Non-Executive Director<br />
<strong>of</strong> Singapore Power Limited <strong>and</strong> Chairman <strong>of</strong> SP Services Limited.<br />
He is a Non-Executive Director <strong>of</strong> SP Australia (Distribution) Limited,<br />
SP Australia (Transmission) Limited <strong>and</strong> SP Australia Networks (RE)<br />
Limited. Eric is a Director <strong>of</strong> Melbourne Business School Limited.<br />
Previously, he was the Chairman <strong>of</strong> CPG Corporation Pte Ltd <strong>and</strong> was<br />
a Director <strong>of</strong> ExxonMobil Singapore Pte Ltd.<br />
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Section 7 Board <strong>of</strong> Directors <strong>and</strong><br />
executive group continued<br />
7.2 CVs <strong>of</strong> key Combined Group executives<br />
1 2<br />
3<br />
4 5<br />
6 7 8 9 10 11 12 13 14<br />
1. BILL HALL<br />
2. JOHN GRILL<br />
3. PETER MEURS<br />
4. EDD PAGANO<br />
5. ANDREW WOOD<br />
6. DAVID HOUSEGO<br />
7. LARRY BENKE<br />
8. IAIN ROSS<br />
9. STUART BRADIE<br />
10. HARRY SAUER<br />
11. ROBERT EDWARDES<br />
12. JEFF OSBORNE<br />
13. MARK SOUTHEY<br />
14. DAVID STEELE<br />
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Stuart Bradie<br />
Stuart is responsible for the African, Asian <strong>and</strong> Middle East<br />
operations. He has held senior management roles in Ranhill<br />
<strong>WorleyParsons</strong> Sdn Bhd – Malaysia <strong>and</strong> he has overseen the rapid<br />
growth <strong>of</strong> <strong>WorleyParsons</strong>‘ businesses in Malaysia, South-East Asia<br />
<strong>and</strong> the Middle East. Prior to joining <strong>WorleyParsons</strong>, Stuart held<br />
Managing Director <strong>and</strong> Country Manager roles with PT Kvaerner<br />
Indonesia <strong>and</strong> Kvaerner Philippines. Stuart has a Bachelor Degree in<br />
Mechanical Engineering from Aberdeen University <strong>and</strong> a Masters <strong>of</strong><br />
Business Administration from the Edinburgh Business School.<br />
Robert Edwardes<br />
Robert joined the Company in 2002 following a 25 year career with<br />
ExxonMobil. Robert’s experience within the oil <strong>and</strong> gas industry<br />
spans upstream operations <strong>and</strong> projects, including HSE <strong>and</strong><br />
operations integrity, production technology, development <strong>and</strong><br />
corporate planning, plus major capital project delivery. His initial role<br />
was to develop <strong>WorleyParsons</strong>’ floating production capability based<br />
on his experience managing deepwater projects for ExxonMobil in<br />
West Africa. In parallel he assumed responsibility for strengthening <strong>of</strong><br />
<strong>WorleyParsons</strong>’ project delivery systems, in addition to managing the<br />
Australian Hydrocarbons business following the acquisition <strong>of</strong><br />
Parsons E&C. He is now responsible for corporate support functions,<br />
including quality, engineering, procurement, construction<br />
management, project services, business systems, human resources,<br />
<strong>and</strong> information <strong>and</strong> <strong>com</strong>munications technology. Robert holds both<br />
a Bachelor Degree <strong>and</strong> Doctorate in Civil Engineering.<br />
Peter Meurs<br />
Peter joined the Company in 1988 <strong>and</strong> has functioned in project<br />
management <strong>and</strong> <strong>com</strong>pany development roles including<br />
establishment <strong>of</strong> the foundations <strong>of</strong> the process business, the<br />
establishment <strong>and</strong> growth <strong>of</strong> alliance <strong>and</strong> integrated services<br />
contracts in Hydrocarbons <strong>and</strong> Minerals & Metals <strong>and</strong> the<br />
development <strong>of</strong> the New Zeal<strong>and</strong> business. Peter is responsible for<br />
the Australian <strong>and</strong> New Zeal<strong>and</strong> region <strong>and</strong> operations. With a<br />
Bachelor Degree in Mechanical Engineering <strong>and</strong> a Fellow <strong>of</strong> the<br />
Institution <strong>of</strong> Engineers Australia, Peter is also a member <strong>of</strong> the<br />
Australian Institute <strong>of</strong> Company Directors.<br />
Jeff Osborne<br />
Jeff is Executive Vice President – Business Development Americas/<br />
Europe, responsible for hydrocarbon sales <strong>and</strong> marketing in the oil<br />
<strong>and</strong> gas, refining, chemicals, <strong>and</strong> petrochemicals markets. Jeff has<br />
over 40 years’ experience (nine years’ international) in the process<br />
industries including oil <strong>and</strong> gas, refining, petrochemicals, chemicals,<br />
biotechnology, <strong>and</strong> pharmaceuticals, with experience in overall<br />
<strong>com</strong>pany management including sales, marketing, <strong>and</strong> strategic<br />
planning. Prior to his present position, Jeff worked with the Badger<br />
<strong>com</strong>pany for 19 years. During this period he held several positions<br />
including Vice President <strong>of</strong> worldwide sales, President <strong>of</strong> Gulf Design<br />
Division, <strong>and</strong> Managing Director <strong>of</strong> Badger Catalytic in the UK where<br />
his responsibilities included pr<strong>of</strong>it <strong>and</strong> loss accountability, strategic<br />
planning, sales, marketing, contracting, <strong>and</strong> operations. Jeff has a<br />
Bachelor <strong>of</strong> Science Degree in Nuclear Engineering from North<br />
Carolina State University.<br />
Edward Pagano<br />
Edd joined Parsons E&C in 1998 after holding senior financial<br />
positions at The Shaw Group <strong>and</strong> Kvaerner John Brown. He brings<br />
over 20 years <strong>of</strong> experience in the oil <strong>and</strong> gas, chemical <strong>and</strong> refining<br />
industries. As <strong>WorleyParsons</strong>’ President – US Operations, he is<br />
responsible for engineering <strong>and</strong> construction management serving<br />
the power, hydrocarbons, infrastructure <strong>and</strong> minerals <strong>and</strong> metals<br />
markets in the US. Edd holds a Masters <strong>of</strong> Business Administration<br />
<strong>and</strong> a Bachelor <strong>of</strong> Science in Accounting.<br />
Iain Ross<br />
Iain is responsible for the Hydrocarbons customer sector globally.<br />
Iain began his career in the UK North Sea working for Conoco (UK) in<br />
1983. He worked for international oil <strong>and</strong> gas <strong>com</strong>panies including<br />
McDermott International Inc, John Brown <strong>and</strong> AMEC Engineering. Iain<br />
joined the Company in 1994 as Manager <strong>of</strong> the Brunei <strong>of</strong>fice. With<br />
a broad technical <strong>and</strong> geographical skill base, Iain has a Bachelor<br />
Degree in Mechanical Engineering, <strong>and</strong> is a Fellow <strong>of</strong> the Institution<br />
<strong>of</strong> Engineers Australia.<br />
Harry Sauer<br />
Harry has over 40 years <strong>of</strong> experience in manufacturing facilities <strong>and</strong><br />
power including nuclear, coal, oil <strong>and</strong> gas power generation, power<br />
delivery/networks <strong>and</strong> asset services. He has led engineering, EPC<br />
<strong>and</strong> construction-only projects <strong>and</strong> programs with an emphasis on<br />
alliance contracting. Harry is responsible for the Power customer<br />
sector globally <strong>and</strong> leads the Company strategy planning <strong>and</strong><br />
development process working closely with David Steele. Harry<br />
worked for General Electric Company for several years at the<br />
beginning <strong>of</strong> his career. He holds a Bachelor <strong>of</strong> Science Degree in Civil<br />
Engineering, <strong>com</strong>pleted the University <strong>of</strong> Virginia Darden Business<br />
School Executive Program <strong>and</strong> is a member <strong>of</strong> the America Society <strong>of</strong><br />
Civil Engineers. He is a registered Pr<strong>of</strong>essional Engineer in several<br />
states in the US.<br />
Mark Southey<br />
Mark is responsible for the Minerals & Metals customer sector<br />
globally. He was formerly a Senior Vice President with Asea Brown<br />
Boveri (ABB); Mark brings to <strong>WorleyParsons</strong> strong financial,<br />
<strong>com</strong>mercial <strong>and</strong> operational experience. He has a successful track<br />
record in leading <strong>and</strong> managing large industrial <strong>and</strong> technology-based<br />
global service businesses having previously held senior international<br />
management roles with both ABB <strong>and</strong> Honeywell in Europe. Mark has<br />
an MBA <strong>and</strong> a Bachelor <strong>of</strong> Science in Engineering.<br />
David Steele<br />
David has over 25 years’ experience across a wide range <strong>of</strong> sectors<br />
including oil <strong>and</strong> gas, petrochemicals, minerals processing <strong>and</strong> power<br />
generation <strong>and</strong> transmission <strong>and</strong> other infrastructure. David is<br />
responsible for the Infrastructure customer sector globally as well as<br />
that part <strong>of</strong> the business that undertakes selective investment in<br />
infrastructure assets. David also works with Harry Sauer to<br />
coordinate the strategy planning <strong>and</strong> development process for the<br />
Company. Prior to joining <strong>WorleyParsons</strong> in 1999, David held<br />
positions with ABB <strong>and</strong> Rolls Royce Industrial Power (Pacific). David<br />
holds a Bachelor Degree in Electrical Engineering <strong>and</strong> a Masters<br />
Degree in Business Administration <strong>and</strong> is a member <strong>of</strong> the Institution<br />
<strong>of</strong> Electrical Engineers, the Australian Institute <strong>of</strong> Company Directors<br />
<strong>and</strong> is a Chartered Pr<strong>of</strong>essional Engineer.<br />
Andrew Wood<br />
Andrew has over 25 years’ experience in the oil <strong>and</strong> gas industry <strong>and</strong><br />
is responsible for acquisitions within the Group <strong>and</strong> operations in<br />
Canada <strong>and</strong> Latin America. Originally based in New Zeal<strong>and</strong>, Andrew<br />
was responsible for <strong>WorleyParsons</strong>’ early expansion into Thail<strong>and</strong><br />
<strong>and</strong> the Middle East, Canada <strong>and</strong> Chile. He project-managed the<br />
successful acquisition <strong>of</strong> Parsons E&C Corporation in November<br />
2004. He holds a Bachelor Degree in Engineering <strong>and</strong> Graduate<br />
Diplomas in Financial Management <strong>and</strong> Labour Management<br />
Relations. He is also a Fellow <strong>of</strong> the Institution <strong>of</strong> Engineers<br />
Australia.<br />
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Section 8<br />
Risk factors<br />
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Section 8 Risk factors<br />
8.1 Introduction<br />
There are a number <strong>of</strong> risks, both specific to <strong>WorleyParsons</strong> <strong>and</strong> general investment risks, which may materially <strong>and</strong> adversely<br />
affect the future operating <strong>and</strong> financial performance <strong>of</strong> <strong>WorleyParsons</strong> <strong>and</strong> the value <strong>of</strong> New Shares. Many <strong>of</strong> these risks are<br />
outside the control <strong>of</strong> <strong>WorleyParsons</strong> <strong>and</strong> its Directors.<br />
This Section discusses some <strong>of</strong> the risks associated with the Acquisition <strong>and</strong> with an investment in <strong>WorleyParsons</strong>. It should be<br />
read in conjunction with Section 3, which includes additional detail on Colt <strong>and</strong> the business risks <strong>and</strong> opportunities associated<br />
with Colt. The risks detailed below are not listed in order <strong>of</strong> importance.<br />
Potential investors should read this Document in its entirety, carefully consider their personal circumstances <strong>and</strong> consult their<br />
stockbroker, accountant or other pr<strong>of</strong>essional advisor before making an investment decision.<br />
8.2 Risks associated with the Acquisition<br />
8.2.1 Increased exposure to oil price movements<br />
The Acquisition will increase <strong>WorleyParsons</strong>’ exposure to oil price movements, specifically due to Colt’s extensive hydrocarbons<br />
operations <strong>and</strong> in particular its heavy oil <strong>and</strong> oil s<strong>and</strong>s activities. Due to the amount <strong>of</strong> capital investment required to develop<br />
an oil s<strong>and</strong>s project or exp<strong>and</strong> an existing facility, investment decisions are based upon long-term views <strong>of</strong> the economic<br />
viability <strong>of</strong> the project, in particular the long-term outlook for oil prices. If customers’ oil price expectations change at various<br />
stages <strong>of</strong> the project development process, they may delay, reduce or cancel plans to construct new oil s<strong>and</strong>s projects or<br />
expansions to existing projects.<br />
8.2.2 Lack <strong>of</strong> growth in major oil s<strong>and</strong>s projects<br />
Notwithst<strong>and</strong>ing the Canadian National Energy Board’s estimates regarding new investment <strong>and</strong> growth in the Canadian oil<br />
s<strong>and</strong>s industry, planned <strong>and</strong> anticipated projects in oil s<strong>and</strong>s <strong>and</strong> other related projects may not materialise. Projected<br />
investments <strong>and</strong> new projects may be postponed or cancelled for reasons including among others:<br />
... changes in the economic viability <strong>of</strong> these projects;<br />
... shortage <strong>of</strong> pipeline capacity to supply gas <strong>and</strong> transport production to major markets;<br />
... lack <strong>of</strong> sufficient infrastructure to support growth;<br />
... shortage <strong>of</strong> skilled workers in Alberta; <strong>and</strong><br />
... escalation <strong>of</strong> estimated costs <strong>of</strong> new projects.<br />
8.2.3 Regulatory risk in relation to royalty arrangements in Alberta<br />
The Canadian <strong>and</strong> Albertan governments currently apply a fiscal regime to the energy industry which is designed to encourage<br />
investment. Details <strong>of</strong> these arrangements are set out in Section 4.1.6. There is a risk that in the future, the fiscal regime could<br />
change through the increase <strong>of</strong> royalties, the removal <strong>of</strong> current capital allowances or the imposition <strong>of</strong> restrictions on the<br />
industry. If this were to happen, dem<strong>and</strong> for Colt’s services may be reduced.<br />
8.2.4 Environmental regulation<br />
The oil s<strong>and</strong>s industry has a considerable impact on the air, l<strong>and</strong> <strong>and</strong> water around which operations are established. Regulatory<br />
change in North America may be introduced, particularly in relation to:<br />
... emission <strong>of</strong> greenhouse gases;<br />
... water usage; <strong>and</strong><br />
... l<strong>and</strong> reclamation.<br />
Changes in regulation <strong>and</strong> laws or policy relating to the energy production industry could have a negative impact on the<br />
operations <strong>of</strong> Colt’s customers. Increased regulatory costs may affect the economics <strong>of</strong> oil s<strong>and</strong>s operations <strong>and</strong> may cause<br />
customers to discontinue or limit their operations, or discourage <strong>com</strong>panies from continuing development activities.<br />
8.2.5 Skills shortage<br />
Alberta, <strong>and</strong> in particular the oil s<strong>and</strong>s sector, has had <strong>and</strong> continues to have a shortage <strong>of</strong> skilled craft workers <strong>and</strong> pr<strong>of</strong>essional<br />
personnel. New projects could further increase the difficulty in finding <strong>and</strong> hiring sufficient employees to work on these<br />
projects <strong>and</strong> may put upward pressure on employees’ remuneration. The skills shortage is likely to continue to be a challenge in<br />
Western Canada for the foreseeable future. Work-sharing across the Combined Group should assist Colt in dealing with the<br />
skills shortage. However, if Colt is not able to access enough employees with appropriate skills, it may be unable to maintain its<br />
customer service levels or satisfy any increased dem<strong>and</strong> for its services.<br />
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8.2.6 Customer concentration<br />
Colt receives most <strong>of</strong> its revenues from providing services to a small number <strong>of</strong> large customers, principally in the hydrocarbons<br />
industry. Revenue from its 10 largest customers represented approximately 80% <strong>of</strong> total revenue in the year ended 31 January<br />
2006. Those customers are expected to continue to account for a significant percentage <strong>of</strong> Colt’s revenue in the future. The<br />
significant reduction in or loss <strong>of</strong> business with one or more <strong>of</strong> its major customers could have a material adverse effect on the<br />
business <strong>and</strong> operations <strong>of</strong> Colt.<br />
8.2.7 Contract pr<strong>of</strong>ile <strong>and</strong> contractual liabilities<br />
In general, Colt’s risk pr<strong>of</strong>ile <strong>and</strong> contracting practice is similar to <strong>WorleyParsons</strong>, with appropriate indemnities, limitations <strong>and</strong><br />
disclaimers <strong>of</strong> consequential damages being negotiated into the majority <strong>of</strong> its contracts.<br />
Nevertheless, in acquiring Colt, <strong>WorleyParsons</strong> may be<strong>com</strong>e liable for costs associated with delays to project delivery, cost<br />
overruns on projects, or deficient works (which can be caused by factors beyond Colt’s control), particularly under contracts<br />
undertaken by members <strong>of</strong> Colt on a fixed price or lump sum basis. The proportion <strong>of</strong> work undertaken on a fixed price or lump<br />
sum basis is less than 10%, <strong>and</strong> historically these contracts have been successfully performed.<br />
The provision <strong>of</strong> services by Colt carries with it the risk <strong>of</strong> potential liability for losses arising from defective work, including the<br />
costs <strong>of</strong> repairing or replacing constructed work <strong>and</strong> installed equipment (so called “bricks <strong>and</strong> mortar” liability). Generally, Colt<br />
seeks to limit or exclude liability for consequential or indirect losses <strong>and</strong> maintains appropriate levels <strong>of</strong> pr<strong>of</strong>essional indemnity<br />
insurance. However, insurance <strong>and</strong> contractual arrangements may not adequately protect it against liability for all losses,<br />
including environmental losses, property damage or losses arising from business interruption. <strong>WorleyParsons</strong> may also be<br />
unable to maintain insurance at levels <strong>of</strong> risk coverage or with deductibles that it considers appropriate, or negotiate adequate<br />
limitations on liability.<br />
8.2.8 Due diligence <strong>and</strong> integration<br />
<strong>WorleyParsons</strong> <strong>and</strong> its advisors have undertaken substantial due diligence, <strong>and</strong> prepared a detailed financial analysis <strong>of</strong> Colt in<br />
order to determine the attractiveness <strong>of</strong> the businesses. However, in preparing this analysis, <strong>WorleyParsons</strong> has relied on<br />
information provided by Colt. To the extent that the actual results achieved by the Colt businesses are lower than those<br />
indicated by <strong>WorleyParsons</strong>’ analysis, there is a risk that <strong>WorleyParsons</strong>’ future pr<strong>of</strong>itability could be harmed.<br />
In particular, <strong>WorleyParsons</strong> may not be able to successfully integrate its operations with those <strong>of</strong> Colt or to realise over time<br />
the full benefits that <strong>WorleyParsons</strong> anticipates. The Acquisition involves the integration <strong>of</strong> businesses that have previously<br />
operated independently.<br />
Integration <strong>of</strong> the Combined Group is a key aspect <strong>of</strong> the Acquisition <strong>and</strong> a significant undertaking <strong>of</strong> itself. The process <strong>of</strong><br />
integrating operations could, among other things, divert management’s attention, interrupt or reduce the performance <strong>of</strong> the<br />
activities <strong>of</strong> one or more <strong>of</strong> the businesses, or result in the loss <strong>of</strong> key personnel, any <strong>of</strong> which could have an adverse effect on<br />
<strong>WorleyParsons</strong>’ business <strong>and</strong> financial condition. There is also a risk that the customers <strong>of</strong> Colt or <strong>WorleyParsons</strong>’ Canadian<br />
businesses may react adversely to the Acquisition.<br />
To address these risks, <strong>WorleyParsons</strong> has developed a <strong>com</strong>prehensive transition <strong>and</strong> integration plan, which is described in<br />
further detail in Section 5. A transition <strong>and</strong> integration team <strong>com</strong>prising senior executives from both <strong>WorleyParsons</strong> <strong>and</strong> Colt<br />
has been established. <strong>WorleyParsons</strong> considers the successful integration <strong>of</strong> acquired businesses as a core skill that has<br />
contributed to its growth over the last five years. However, there can be no assurance that it will be successful in integrating<br />
the <strong>WorleyParsons</strong> <strong>and</strong> Colt businesses.<br />
8.2.9 Contractual disputes, litigation <strong>and</strong> other contingent liabilities<br />
On Completion, <strong>WorleyParsons</strong> will acquire all the entities owned by Colt, <strong>and</strong> will therefore assume the contingent liabilities<br />
<strong>of</strong> those entities, for which it may not be adequately indemnified. This includes potential liabilities in respect <strong>of</strong> contractual<br />
disputes, litigation <strong>and</strong> other contingent liabilities.<br />
The Master Transaction Agreement contains a number <strong>of</strong> representations, warranties <strong>and</strong> indemnities in relation to such<br />
matters. These warranties <strong>and</strong> indemnities are described in greater detail in Section 9.3.1 but may not be sufficient to cover all<br />
claims <strong>and</strong> liabilities.<br />
8.2.10 Joint venture partners <strong>and</strong> arrangements<br />
The only joint venture Colt is involved in which has a change <strong>of</strong> control provision is the NANA/Colt joint venture. Colt has<br />
approached NANA Development Corporation (NANA) <strong>and</strong> has received an assurance that NANA’s termination rights will not be<br />
exercised following the Acquisition.<br />
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8.2.11 Foreign exchange<br />
The Purchase Price for the Acquisition is payable in Canadian dollars. <strong>WorleyParsons</strong> has entered into option agreements to<br />
hedge certain significant foreign exchange exposures in relation to the payment <strong>of</strong> the Purchase Price. In the event that<br />
Completion does not occur, <strong>WorleyParsons</strong>’ foreign exchange positions would be unwound <strong>and</strong> this would not have a material<br />
effect on <strong>WorleyParsons</strong>.<br />
The Acquisition involves significant assets, liabilities <strong>and</strong> earnings denominated in currencies other than Australian dollars, in<br />
particular Canadian dollars. These assets, liabilities <strong>and</strong> earnings are therefore exposed to fluctuations in the Canadian<br />
dollar/Australian dollar exchange rate, not all <strong>of</strong> which can be efficiently neutralised by available hedging techniques. In general,<br />
appreciation <strong>of</strong> the Australian dollar against these currencies will adversely affect the level <strong>of</strong> sales revenue <strong>and</strong> pr<strong>of</strong>its that<br />
<strong>WorleyParsons</strong> reports from these businesses, when translated into Australian dollars.<br />
8.2.12 Interest rates<br />
As part <strong>of</strong> the Acquisition, <strong>WorleyParsons</strong> will have available approximately $550 million as Acquisition financing (see<br />
Section 9.2). Of this debt, $333 million will be denominated in Canadian dollars. Debt drawn for the Acquisition will be subject<br />
to Canadian interest rate risk. While this exposure may be managed using hedging, <strong>WorleyParsons</strong> may have a residual<br />
exposure.<br />
8.2.13 Refinancing<br />
On Completion, <strong>WorleyParsons</strong> will have $550 million <strong>of</strong> new debt available under a bridge facility. Of the $550 million,<br />
$474 million is expected to be drawn initially. $141 million is intended to be immediately repaid following receipt <strong>of</strong> the<br />
proceeds <strong>of</strong> the Retail Entitlement Offer, $333 million will be used to finance the Acquisition <strong>and</strong> the remaining, undrawn<br />
amount will be available for working capital requirements <strong>and</strong> additional capacity. The bridge facility has a 12 month term <strong>and</strong><br />
it is <strong>WorleyParsons</strong>’ intention that this bridge facility will be refinanced within six to 12 months through longer-term debt.<br />
There is no guarantee that <strong>WorleyParsons</strong> will be able to refinance the drawn amount <strong>of</strong> the bridge facility on favourable<br />
terms, due to higher interest rates or restrictive covenants which may have an impact on its financial performance <strong>and</strong> limit its<br />
ability to exp<strong>and</strong>.<br />
8.2.14 Retention <strong>of</strong> key personnel<br />
The operating <strong>and</strong> financial performance <strong>of</strong> Colt, like <strong>WorleyParsons</strong>, is largely dependent on its ability to retain <strong>and</strong> attract key<br />
personnel.<br />
While every effort will be made to retain key employees <strong>and</strong> contractors <strong>and</strong> to recruit new personnel as the need arises, loss<br />
<strong>of</strong> a number <strong>of</strong> key personnel may adversely affect the earnings or growth prospects <strong>of</strong> the Combined Group. Although Colt<br />
has developed succession plans <strong>and</strong> mentoring programs to address this issue, there is a risk that appropriate staff may not be<br />
attracted for the same cost or at all.<br />
It is anticipated that from Completion, key executives will participate in <strong>WorleyParsons</strong>’ existing short-term incentive program.<br />
Key executives will be invited to participate in the up<strong>com</strong>ing financial year 2008 long-term incentive program. Full details <strong>of</strong><br />
these programs will be described in the <strong>WorleyParsons</strong> 2007 Annual Report.<br />
8.2.15 Cord Projects<br />
Colt subsidiary Cord Projects provides construction services in the form <strong>of</strong> blue collar labour at its module assembly yard,<br />
fabrication shop <strong>and</strong> at customer sites. The services that Cord Projects provides are reimbursed as hourly rates or progress<br />
against a defined services scope. Cord Projects does not take on material lump sum turn key contracts or full lump sum EPC risk.<br />
8.2.16 Taxation<br />
Variations in the taxation laws <strong>of</strong> Australia, Canada <strong>and</strong> the other countries in which the Combined Group will operate could<br />
materially affect <strong>WorleyParsons</strong>’ financial performance. The interpretation <strong>of</strong> taxation law could also change, leading to a<br />
change in taxation treatment <strong>of</strong> investments or activities. In some jurisdictions in which <strong>WorleyParsons</strong> operates, the<br />
application <strong>of</strong> tax law <strong>and</strong> policy to particular facts can be <strong>com</strong>plicated <strong>and</strong> potentially uncertain.<br />
8.2.17 Accounting<br />
Colt’s accounting policies <strong>and</strong> methods are fundamental to how it records <strong>and</strong> reports its financial position <strong>and</strong> results <strong>of</strong><br />
operations. Colt’s management may have exercised judgement in selecting <strong>and</strong> applying many <strong>of</strong> these accounting policies <strong>and</strong><br />
methods. In some cases, management may have selected an accounting policy or method which might have been reasonable<br />
under the circumstances yet might have resulted in reporting materially different out<strong>com</strong>es than would have been reported<br />
under a different alternative. The integration <strong>of</strong> the <strong>WorleyParsons</strong> <strong>and</strong> Colt accounting functions may lead to revisions <strong>of</strong><br />
Colt’s accounting policies, which may impact on <strong>WorleyParsons</strong>’ reported results.<br />
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8.2.18 Transaction execution<br />
The acquisition <strong>of</strong> Colt will be made under the terms <strong>of</strong> the Master Transaction Agreement, through which the Vendors have<br />
provided representations, warranties <strong>and</strong> undertakings in relation to the Acquisition. However, the Vendors’ liability is limited<br />
<strong>and</strong> <strong>WorleyParsons</strong> can <strong>of</strong>fer no assurance that such representations, warranties <strong>and</strong> undertakings will be sufficient to cover all<br />
liabilities, claims or occurrences, should they eventuate in relation to the Acquisition.<br />
The Acquisition is also subject to certain conditions precedent including obtaining required regulatory approvals, confirmation<br />
<strong>of</strong> availability <strong>of</strong> the debt funding <strong>and</strong> other conditions relating to the performance <strong>of</strong> obligations <strong>and</strong> there being no material<br />
adverse change (as described in Section 9.3). Should those conditions precedent not be satisfied, the Acquisition may not<br />
proceed.<br />
The terms <strong>of</strong> the Exchangeable Shares issued as consideration for the Acquisition are summarised in Section 9.1. The<br />
Exchangeable Shares may be on issue for a period <strong>of</strong> up to 20 years (as <strong>WorleyParsons</strong>’ rights to require exchange are very<br />
limited). During this period Exchangeable Shareholders must be provided with the same or Economically Equivalent out<strong>com</strong>es in<br />
the event <strong>of</strong> various corporate actions by <strong>WorleyParsons</strong>. In addition, the holders may exchange their Exchangeable Shares for<br />
Ordinary Shares at any time after the Escrow Period. However, the terms <strong>of</strong> the Exchangeable Shares are intended to replicate<br />
the economic interests <strong>of</strong> Shareholders in any event as described in Section 9.1.<br />
8.3 Risks associated with <strong>WorleyParsons</strong> <strong>and</strong> Colt<br />
<strong>WorleyParsons</strong>, Colt <strong>and</strong> the Combined Group are or will be subject to many <strong>com</strong>mon risks following Completion. Some <strong>of</strong> the<br />
more important include those described below:<br />
8.3.1 Reputation<br />
There is a risk that <strong>WorleyParsons</strong>’ reputation could be damaged by real or perceived underperformance by <strong>WorleyParsons</strong> or<br />
Colt on a project performed for an international customer.<br />
8.3.2 Country-specific factors<br />
The Combined Group operates in over 30 countries, including a number <strong>of</strong> countries in the Middle East, the Former Soviet<br />
Union, Latin America <strong>and</strong> Central <strong>and</strong> South-East Asia, with developing legal, regulatory or political systems, which are subject<br />
to dynamic change.<br />
Sustained periods <strong>of</strong> instability in a particular country may affect its operating <strong>and</strong> financial performance, in terms <strong>of</strong> securing<br />
new work, the impact <strong>of</strong> such instability on its customers or its ability to execute work as a result <strong>of</strong> political instability or lack<br />
<strong>of</strong> domestic security.<br />
8.3.3 Exposure to cyclical markets <strong>and</strong> <strong>com</strong>modity prices<br />
The Combined Group’s financial performance will continue to be sensitive to the level <strong>of</strong> activity within the industries in which<br />
<strong>WorleyParsons</strong> <strong>and</strong> Colt currently operate. The level <strong>of</strong> activity in its sectors is cyclical <strong>and</strong> sensitive to a number <strong>of</strong> factors<br />
outside <strong>WorleyParsons</strong>’ control, including the level <strong>of</strong> gross domestic product in the markets in which it operates, oil <strong>and</strong> other<br />
<strong>com</strong>modity prices <strong>and</strong> foreign currency movements.<br />
<strong>WorleyParsons</strong>’ presence in multiple industry sectors is expected to partially <strong>of</strong>fset its exposure to cyclical factors affecting<br />
any individual industry. However, <strong>WorleyParsons</strong> is not able to predict the timing, extent or duration <strong>of</strong> the activity cycles in<br />
these industries, including those which are dependent on oil prices.<br />
8.3.4 Competition<br />
Increased <strong>com</strong>petition could result in price reductions, under-utilisation <strong>of</strong> personnel, reduced operating margins <strong>and</strong> loss <strong>of</strong><br />
market share. Any <strong>of</strong> these occurrences could adversely affect <strong>WorleyParsons</strong>’ operating <strong>and</strong> financial performance.<br />
8.3.5 Sustainability <strong>of</strong> growth <strong>and</strong> margins<br />
<strong>WorleyParsons</strong> <strong>and</strong> Colt have historically achieved growth in revenue <strong>and</strong> pr<strong>of</strong>its. The sustainability <strong>of</strong> this growth <strong>and</strong> the level<br />
<strong>of</strong> pr<strong>of</strong>it margins from operations are dependent on a number <strong>of</strong> factors, some <strong>of</strong> which are outside <strong>of</strong> the Combined Group’s<br />
control. Industry margins in all sectors <strong>of</strong> the Combined Group’s activities may be subject to continuing but varying margin<br />
pressures. There is no assurance that the historical performance <strong>of</strong> <strong>WorleyParsons</strong> or Colt is indicative <strong>of</strong> future operating<br />
results <strong>of</strong> the Combined Group.<br />
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Section 8 Risk factors continued<br />
8.3.6 Management <strong>of</strong> growth<br />
<strong>WorleyParsons</strong> <strong>and</strong> Colt have experienced rapid growth in personnel, the scope <strong>of</strong> operating activities, financial systems <strong>and</strong> the<br />
geographic area <strong>of</strong> their operations. This growth has resulted in an increased level <strong>of</strong> responsibility for both existing <strong>and</strong> new<br />
management personnel. To manage this growth effectively, the Combined Group will need to maintain efficient control <strong>and</strong><br />
supervision <strong>of</strong> its operating <strong>and</strong> financial systems <strong>and</strong> continue to exp<strong>and</strong>, train <strong>and</strong> manage its employee <strong>and</strong> contractor base.<br />
In periods <strong>of</strong> peak dem<strong>and</strong> for its services, this may lead to a reduction in efficiency in operations or an increase in overhead costs.<br />
8.3.7 Sensitivity <strong>of</strong> earnings to project revenue<br />
A portion <strong>of</strong> the Combined Group’s revenue relates to large projects <strong>and</strong> is earned over a finite period. Project revenue, by its<br />
nature, has the potential to vary between years <strong>and</strong> is sensitive to increases <strong>and</strong> decreases in the level <strong>of</strong> industry activity.<br />
8.3.8 Asbestos<br />
In 2004, Worley acquired Parsons E&C. Parsons E&C was previously part <strong>of</strong> the Parsons Corporation group. Certain members<br />
<strong>of</strong> the Parsons E&C group <strong>and</strong> the Parsons Corporation group have been, <strong>and</strong> continue to be, the subject <strong>of</strong> litigation relating<br />
to the h<strong>and</strong>ling <strong>of</strong>, or exposure to, asbestos. Based on its due diligence investigations during the acquisition <strong>of</strong> Parsons E&C,<br />
including an analysis <strong>of</strong> available insurance coverage, <strong>and</strong> in light <strong>of</strong> the continuation <strong>and</strong> extension <strong>of</strong> the existing indemnity<br />
<strong>and</strong> asbestos claims administration arrangements between Parsons Corporation <strong>and</strong> Parsons E&C, <strong>WorleyParsons</strong> is not<br />
aware <strong>of</strong> any circumstance that is likely to lead to a material residual contingent exposure for <strong>WorleyParsons</strong> in respect <strong>of</strong><br />
asbestos liabilities.<br />
8.3.9 Information technology<br />
<strong>WorleyParsons</strong> has invested in the development <strong>of</strong> information systems designed to assist it in monitoring individual contracts,<br />
thereby ensuring pr<strong>of</strong>itable operations are possible while allowing loss-making situations to be identified <strong>and</strong> rectified. While<br />
<strong>WorleyParsons</strong> will make every effort to ensure that these systems are maintained <strong>and</strong> improved to best meet the dem<strong>and</strong>s <strong>of</strong><br />
the exp<strong>and</strong>ed <strong>WorleyParsons</strong> organisation <strong>and</strong> the market generally, system failure, <strong>and</strong> any systems integration or migration in<br />
connection with the Acquisition, may negatively impact on the Combined Group’s performance.<br />
8.3.10 Other<br />
The above risks are not exhaustive <strong>of</strong> the risks faced by Shareholders. The risks outlined above <strong>and</strong> other risks may materially<br />
affect the future performance <strong>of</strong> Shares in <strong>WorleyParsons</strong>. Accordingly, no assurances or guarantees <strong>of</strong> future performance,<br />
pr<strong>of</strong>itability, distributions, payments <strong>of</strong> dividends or return <strong>of</strong> capital are given by the Combined Group.<br />
8.4 General risks<br />
8.4.1 General investment<br />
There are general risks associated with investments in equities. The trading price <strong>of</strong> shares in <strong>WorleyParsons</strong> may fluctuate<br />
with movements in equity capital markets in Australia <strong>and</strong> internationally.<br />
It should be noted that there is no guarantee that the New Shares will trade at or above the Application Price <strong>of</strong> $21.00.<br />
There is also no assurance, if you do not take up your Entitlement, that any Retail Premium amount will be received.<br />
8.4.2 General economic conditions<br />
<strong>WorleyParsons</strong>’ operating <strong>and</strong> financial performance is influenced by a variety <strong>of</strong> general economic <strong>and</strong> business conditions<br />
including the level <strong>of</strong> inflation, interest rates, exchange rates <strong>and</strong> government fiscal, monetary <strong>and</strong> regulatory policies. This will<br />
continue to be the case for the Combined Group. Prolonged deterioration in general economic conditions, including an increase<br />
in interest rates or decrease in consumer <strong>and</strong> business dem<strong>and</strong>, could be expected to ultimately have an adverse impact on<br />
<strong>WorleyParsons</strong>’ operating <strong>and</strong> financial performance. However, because <strong>of</strong> the extended time periods involved in many <strong>of</strong> the<br />
projects in which <strong>WorleyParsons</strong> is involved, the impact might not be immediate.<br />
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Section 9<br />
Additional<br />
information<br />
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Section 9 Additional information<br />
You should be aware <strong>of</strong> a number <strong>of</strong> other matters that have not been addressed in detail elsewhere in this Document. This<br />
Section gives details <strong>of</strong> the availability <strong>of</strong> certain other important documents <strong>and</strong> a summary <strong>of</strong> some <strong>of</strong> these documents that<br />
are relevant for your investment decision. In addition, certain other prescribed details in respect <strong>of</strong> the Entitlement Offer <strong>and</strong><br />
the Acquisition have been set out in this Section.<br />
9.1 Summary <strong>of</strong> the Exchangeable Share structure<br />
The Acquisition will be financed by the Entitlement Offer, additional debt funding <strong>and</strong> the issue <strong>of</strong> Exchangeable Shares to the<br />
Vendors. If approved by Shareholders, the Special Voting Share will also be issued to Computershare Trust Company <strong>of</strong> Canada<br />
(Trustee) to be held on behalf <strong>of</strong> the Vendors. The issue <strong>of</strong> Exchangeable Shares is a <strong>com</strong>mon structure in Canada for the<br />
deferral <strong>of</strong> tax.<br />
Approximately 12.2 million Exchangeable Shares will be issued by CanCo (a newly incorporated subsidiary <strong>of</strong> <strong>WorleyParsons</strong>) to<br />
the Vendors at the Institutional Bookbuild Price per Exchangeable Share. <strong>WorleyParsons</strong> will also seek Shareholder approval to<br />
issue the Special Voting Share to the Trustee (to hold for the benefit <strong>of</strong> the Vendors). The intended effect <strong>of</strong> the issue <strong>of</strong> the<br />
Exchangeable Shares <strong>and</strong> the Special Voting Share is to replicate the economic effect <strong>of</strong> issuing Ordinary Shares to the<br />
Vendors.<br />
On Completion, the directors <strong>of</strong> CanCo will be John Grill, Bill Hall, Larry Benke <strong>and</strong> Gordon Johnson.<br />
9.1.1 Structure diagram <strong>and</strong> documents<br />
The following is a diagrammatic representation <strong>of</strong> the Exchangeable Share structure:<br />
Diagram 10 Exchangeable Share structure<br />
Special Voting Share<br />
Canadian<br />
trust<br />
<strong>WorleyParsons</strong><br />
Support<br />
Agreement<br />
CanCo<br />
ordinary<br />
shares<br />
Exchange Rights<br />
Agreement under<br />
which Ordinary<br />
Shares are delivered<br />
on exchange <strong>of</strong><br />
Exchangeable<br />
Shares<br />
Canadian trust<br />
must vote in<br />
accordance with<br />
instructions <strong>of</strong><br />
Exchangeable<br />
Shareholders<br />
CanCo<br />
Vendors<br />
Exchangeable Shares<br />
The Exchangeable Share Provisions set out the rights, privileges, restrictions <strong>and</strong> conditions <strong>of</strong> the Exchangeable Shares.<br />
The Special Voting Share terms <strong>of</strong> issue set out the terms <strong>and</strong> conditions on which the Special Voting Share is issued.<br />
In addition, the following agreements will be entered into to support the Exchangeable Share structure:<br />
... the Support Agreement;<br />
... the Exchange Rights Agreement; <strong>and</strong><br />
... the Voting Trust Agreement.<br />
All <strong>of</strong> these documents, other than the Special Voting Share terms <strong>of</strong> issue <strong>and</strong> the Exchangeable Share Provisions, are<br />
governed by the laws <strong>of</strong> Alberta, Canada. The Exchangeable Share Provisions are governed under the Canada Business<br />
Corporations Act. The key terms <strong>of</strong> each <strong>of</strong> these documents are summarised below.<br />
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9.1.2 Exchangeable Share Provisions<br />
The Exchangeable Shares will be issued by CanCo. All the CanCo <strong>com</strong>mon shares will be directly or indirectly held by<br />
<strong>WorleyParsons</strong>. These <strong>com</strong>mon shares are similar to ordinary shares.<br />
The Exchangeable Share Provisions contain the following terms:<br />
Dividends<br />
CanCo must declare the following dividends <strong>and</strong> capital distributions on the Exchangeable Shares:<br />
... the same cash dividend or capital distribution as declared on the Ordinary Shares; <strong>and</strong><br />
... the same or an Economically Equivalent non-cash dividend or capital distribution as declared on the Ordinary Shares.<br />
Such dividends <strong>and</strong> capital distributions are to be paid to Exchangeable Shareholders using the same record <strong>and</strong> payment dates<br />
as applicable for the corresponding dividend or capital distribution on the Ordinary Shares. However, no dividend will be declared<br />
or paid on the Exchangeable Shares in respect <strong>of</strong> <strong>WorleyParsons</strong>’ interim dividend for the half year to 31 December 2006.<br />
Where non-cash dividends or capital distributions on Ordinary Shares include:<br />
... more Ordinary Shares, the Exchangeable Shareholders will acquire more Exchangeable Shares; or<br />
... other property, the Exchangeable Shareholders will acquire the same or Economically Equivalent type <strong>and</strong> amount <strong>of</strong><br />
property.<br />
Economic Equivalence is to be determined by the CanCo Board, in good faith <strong>and</strong> in its sole discretion based on certain<br />
prescribed factors <strong>and</strong> its determination will be conclusive <strong>and</strong> binding on the Exchangeable Shareholders <strong>and</strong> CanCo. In<br />
particular, it must consider (among other things) the general taxation consequences <strong>of</strong> the dividend or capital distribution to<br />
Exchangeable Shareholders, taken as a whole, to the extent that such consequences may differ from the general Australian<br />
<strong>and</strong> Canadian taxation consequences to Shareholders.<br />
As the Exchangeable Shares are not issued by an Australian resident <strong>com</strong>pany, there will be no ability for dividends paid on the<br />
Exchangeable Shares to be franked for Australian tax purposes.<br />
Exchange<br />
Exchange <strong>of</strong> the Exchangeable Shares into Ordinary Shares may occur in a number <strong>of</strong> situations:<br />
... Initiated by Exchangeable Shareholders<br />
Exchangeable Shareholders may, at any time (subject to the escrow arrangements described in Section 9.3.2), require CanCo<br />
to exchange any or all <strong>of</strong> their Exchangeable Shares (subject to a minimum exchange <strong>of</strong> the lower <strong>of</strong> 1,000 Exchangeable<br />
Shares (after adjustment) or all the Exchangeable Shares held by the Exchangeable Shareholder);<br />
... Initiated by CanCo<br />
CanCo may only exchange all <strong>of</strong> the Exchangeable Shares in certain circumstances:<br />
– after the “sunset date” which is 20 years from the Closing Date;<br />
– a “<strong>com</strong>pany sale” has occurred, that is:<br />
– a takeover bid for all the Ordinary Shares which is, or be<strong>com</strong>es, unconditional, where the bidder has acquired at any time<br />
during the <strong>of</strong>fer period a relevant interest in more than 50% <strong>of</strong> the Ordinary Shares or the Board has unanimously<br />
re<strong>com</strong>mended acceptance <strong>of</strong> the bid, <strong>and</strong> acceptance <strong>of</strong> the bid would result in the bidder having a relevant interest in<br />
all the Ordinary Shares;<br />
– court approval is obtained for a scheme <strong>of</strong> arrangement which would result in all the Ordinary Shares being acquired by<br />
the bidder;<br />
– all or substantially all <strong>of</strong> <strong>WorleyParsons</strong>’ assets are disposed <strong>of</strong> to a third party; or<br />
– more than 50% <strong>of</strong> the CanCo <strong>com</strong>mon shares are disposed <strong>of</strong> to a third party,<br />
provided that, in each case (except where the “<strong>com</strong>pany sale” has resulted from an unsolicited proposal that does not<br />
subsequently be<strong>com</strong>e a negotiated transaction between CanCo <strong>and</strong> the acquirer), the CanCo Board has first notified the<br />
acquirer <strong>of</strong> the Exchangeable Share structure <strong>and</strong> requested the acquirer to make reasonable <strong>com</strong>mercial efforts to<br />
substantially replicate the terms <strong>and</strong> conditions <strong>of</strong> the Exchangeable Shares in connection with the takeover or disposal<br />
<strong>and</strong> the acquirer has declined to do so;<br />
– a change in Canadian tax laws resulting in the ability to exchange the Exchangeable Shares for Ordinary Shares on a<br />
tax-deferred basis;<br />
– less than 5% <strong>of</strong> the Exchangeable Shares issued on the Closing Date (after adjustment) remain outst<strong>and</strong>ing; or<br />
– holders <strong>of</strong> two-thirds <strong>of</strong> the Exchangeable Shares approve CanCo’s exchange <strong>of</strong> all <strong>of</strong> the Exchangeable Shares.<br />
... Liquidation<br />
on a liquidation, dissolution or winding up <strong>of</strong> CanCo, the Exchangeable Shares are automatically exchanged.<br />
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In any <strong>of</strong> the events described above triggering exchange by CanCo, <strong>WorleyParsons</strong> or its designated subsidiary has the right,<br />
but not the obligation, to purchase the Exchangeable Shares which would otherwise be the subject <strong>of</strong> the exchange. If CanCo<br />
does not exchange, <strong>WorleyParsons</strong> or its designated subsidiary has an obligation to purchase the Exchangeable Shares.<br />
On an exchange by CanCo or purchase by <strong>WorleyParsons</strong> or its designated subsidiary the Exchangeable Shareholder is to<br />
receive, for each Exchangeable Share, one Ordinary Share (subject to adjustments) <strong>and</strong> any declared <strong>and</strong> unpaid dividends on<br />
that Exchangeable Share.<br />
Voting rights<br />
Exchangeable Shareholders are not entitled to receive notice <strong>of</strong>, or attend, any shareholder meetings <strong>of</strong> CanCo or to vote at any<br />
such meeting, except as required by the Exchangeable Share Provisions or Canadian law (such as for meetings called for the<br />
purpose <strong>of</strong> authorising changes to the terms <strong>of</strong> the Exchangeable Shares, authorising a sale <strong>of</strong> all or substantially all the assets<br />
<strong>of</strong> CanCo or authorising <strong>of</strong> the dissolution <strong>of</strong> CanCo).<br />
Transferability<br />
The Exchangeable Shares may not be transferred without CanCo’s prior written consent, except to certain “related entities”,<br />
such as an individual who directly or indirectly controls a corporate Exchangeable Shareholder <strong>and</strong> certain family members <strong>and</strong><br />
trusts. If a purported transfer occurs in breach <strong>of</strong> this, the purported transfer is void <strong>and</strong> the Exchangeable Shareholder is<br />
forced to have all <strong>of</strong> such Exchangeable Shareholder’s Exchangeable Shares exchanged by CanCo.<br />
Ranking<br />
The Exchangeable Shares rank ahead <strong>of</strong> the <strong>com</strong>mon shares <strong>of</strong> CanCo <strong>and</strong> any other shares ranking below the Exchangeable<br />
Shares with respect to the payment <strong>of</strong> dividends.<br />
Compliance with other agreements<br />
CanCo must perform its obligations, <strong>and</strong> ensure <strong>WorleyParsons</strong> <strong>and</strong> its designated subsidiaries perform their obligations, under<br />
the Support Agreement <strong>and</strong> the Exchange Rights Agreement. CanCo may not agree to any amendment to these agreements<br />
without approval <strong>of</strong> the Exchangeable Shareholders.<br />
9.1.3 Support Agreement<br />
The Support Agreement between <strong>WorleyParsons</strong> <strong>and</strong> CanCo obliges <strong>WorleyParsons</strong> to take certain actions <strong>and</strong> make certain<br />
payments <strong>and</strong> deliveries to support CanCo’s obligations under the Exchangeable Share Provisions. It also places certain<br />
restrictions on <strong>WorleyParsons</strong>’ actions with respect to the Ordinary Shares unless the same or Economically Equivalent actions<br />
are taken with respect to the Exchangeable Shares.<br />
Restrictions on <strong>WorleyParsons</strong><br />
Until all the Exchangeable Shares are exchanged or purchased under the Exchangeable Share Provisions, <strong>WorleyParsons</strong> is<br />
restricted from doing the following things, without approval from CanCo <strong>and</strong> the Exchangeable Shareholders:<br />
Dividends <strong>and</strong> distributions<br />
Rights issues <strong>and</strong> similar issues or<br />
distributions<br />
Buy-backs<br />
Share changes<br />
<strong>WorleyParsons</strong> must not …<br />
declare or pay any dividend or make any<br />
distribution on the Ordinary Shares<br />
issue or distribute Ordinary Shares,<br />
rights to subscribe for Ordinary Shares,<br />
other shares, derivatives, warrants, debt<br />
securities or other assets <strong>of</strong><br />
<strong>WorleyParsons</strong> to Shareholders<br />
make an <strong>of</strong>fer to all or substantially all<br />
Shareholders to buyback Ordinary<br />
Shares<br />
effect a conversion or other change to<br />
the number <strong>of</strong> Ordinary Shares on issue<br />
or reclassify the Ordinary Shares<br />
unless …<br />
CanCo declares, pays or makes the<br />
same per share dividend or distribution<br />
on the Exchangeable Shares in<br />
accordance with the Exchangeable<br />
Share Provisions simultaneously, or at<br />
least as soon as reasonably practicable<br />
CanCo issues or distributes the same or<br />
an Economically Equivalent on a per<br />
share basis simultaneously, or at least<br />
as soon as reasonably practicable<br />
<strong>WorleyParsons</strong> or CanCo takes<br />
reasonable steps to ensure the same or<br />
an Economically Equivalent on a per<br />
share basis <strong>of</strong> such <strong>of</strong>fer is open to<br />
Exchangeable Shareholders<br />
the same or an Economically Equivalent<br />
change is made simultaneously, or at<br />
least as soon as reasonably practicable<br />
to the rights <strong>of</strong> Exchangeable Holders.<br />
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These restrictions do not apply in certain situations such as placements <strong>and</strong> <strong>of</strong>ferings, selective or on-market buy-backs <strong>of</strong><br />
Ordinary Shares or if such a change is already contemplated in the Exchangeable Share Provisions.<br />
Takeovers<br />
Where a takeover <strong>of</strong> <strong>WorleyParsons</strong> is proposed or re<strong>com</strong>mended by the Board or is to be otherwise effected with its consent<br />
or approval <strong>and</strong> the Exchangeable Shares are not proposed to be, pursuant to a “<strong>com</strong>pany sale” (see Section 9.1.2) which has<br />
<strong>com</strong>menced, once the relevant requirements <strong>of</strong> the “<strong>com</strong>pany sale” definition are met, exchanged or purchased under the terms<br />
<strong>of</strong> the Exchangeable Share Provisions, <strong>WorleyParsons</strong> must use its <strong>com</strong>mercially reasonable efforts to enable Exchangeable<br />
Shareholders to participate in the takeover <strong>of</strong>fer to the same extent <strong>and</strong> on an Economically Equivalent basis as Shareholders,<br />
without discrimination. This includes ensuring that Exchangeable Shareholders may participate without initiating exchange <strong>of</strong><br />
their Exchangeable Shares themselves or if the acquirer intends only to acquire Ordinary Shares, ensuring that any exchange<br />
is conditional on the <strong>of</strong>fer be<strong>com</strong>ing unconditional. This is subject to CanCo’s right to exchange, <strong>and</strong> <strong>WorleyParsons</strong> <strong>and</strong> its<br />
designated subsidiary’s right to purchase, the Exchangeable Shares <strong>and</strong> such action not being contrary to the Board’s fiduciary<br />
duties (having received advice).<br />
Combinations etc.<br />
Until all the Exchangeable Shares are exchanged or purchased under the Exchangeable Share Provisions, <strong>WorleyParsons</strong> must<br />
not consummate any transaction (whether by statutory procedure such as an amalgamation, reorganisation, consolidation or<br />
merger or a transfer, sale or lease) whereby CanCo <strong>and</strong> all or substantially all <strong>of</strong> <strong>WorleyParsons</strong>’ undertaking, property <strong>and</strong><br />
assets would be<strong>com</strong>e the property <strong>of</strong> another, or in the case <strong>of</strong> a merger, <strong>of</strong> the continuing corporation unless that other<br />
person assumes the responsibilities <strong>of</strong> <strong>WorleyParsons</strong> under the Support Agreement. This is subject to CanCo’s right to<br />
exchange, <strong>and</strong> <strong>WorleyParsons</strong> <strong>and</strong> its designated subsidiary’s right to purchase, the Exchangeable Shares.<br />
Corporate actions involving CanCo<br />
<strong>WorleyParsons</strong> must have regard to taking necessary action (including taking into account the interests <strong>of</strong> Exchangeable<br />
Shareholders) to ensure that CanCo meets solvency tests under CanCo’s governing statute <strong>and</strong> the Canada Business<br />
Corporations Act.<br />
<strong>WorleyParsons</strong> must, unless it has the approval <strong>of</strong> the Exchangeable Shareholders, retain its interest in all <strong>of</strong> the voting shares<br />
in CanCo <strong>and</strong> its designated subsidiary including by retaining its interests in all the voting shares <strong>of</strong> any <strong>com</strong>pany or <strong>com</strong>panies<br />
through which it indirectly holds all <strong>of</strong> the voting shares in CanCo or the designated subsidiary.<br />
Support <strong>of</strong> CanCo<br />
If any event occurs that requires CanCo to deliver Ordinary Shares to any Exchangeable Shareholder, <strong>WorleyParsons</strong> is obliged<br />
to issue <strong>and</strong> deliver the requisite number <strong>of</strong> Ordinary Shares within the time required for CanCo to fulfil its obligations.<br />
<strong>WorleyParsons</strong> is also obliged to provide CanCo with sufficient funds, assets or other property necessary to enable CanCo to<br />
satisfy its obligations under the Exchangeable Share Provisions, the Exchange Rights Agreement <strong>and</strong> the Support Agreement.<br />
<strong>WorleyParsons</strong> provides covenants in relation to the treatment <strong>of</strong> the Exchangeable Shares, the tradeability <strong>of</strong> Ordinary Shares<br />
delivered under the Exchangeable Share Provisions <strong>and</strong> the tax status <strong>of</strong> CanCo.<br />
9.1.4 Exchange Rights Agreement<br />
The Exchange Rights Agreement between <strong>WorleyParsons</strong>, CanCo, <strong>WorleyParsons</strong> Canada Callco Ltd <strong>and</strong> each Exchangeable<br />
Shareholder, obliges <strong>WorleyParsons</strong> to purchase from such Exchangeable Shareholders all or any part <strong>of</strong> the Exchangeable<br />
Shares in certain circumstances <strong>and</strong> to give various notices to the Exchangeable Shareholders.<br />
Exchange rights<br />
Each Exchangeable Shareholder has a right to require <strong>WorleyParsons</strong> to purchase all or any part <strong>of</strong> its Exchangeable Shares on:<br />
... the liquidation <strong>of</strong> <strong>WorleyParsons</strong>;<br />
... the liquidation <strong>of</strong> CanCo;<br />
... the failure <strong>of</strong> CanCo to exchange all or part <strong>of</strong> the Exchangeable Shares under the Exchangeable Share Provisions; <strong>and</strong><br />
... the failure <strong>of</strong> <strong>WorleyParsons</strong> or its designated subsidiary to purchase all or part <strong>of</strong> the Exchangeable Shares under the<br />
Exchangeable Share Provisions.<br />
On purchase, the Exchangeable Shareholder is to receive for each Exchangeable Share exchanged one Ordinary Share (subject<br />
to adjustments) <strong>and</strong> any declared <strong>and</strong> unpaid dividends on that Exchangeable Share.<br />
Prior to the record date for determining shareholders entitled to participate in a liquidation or winding up <strong>of</strong> <strong>WorleyParsons</strong>,<br />
<strong>WorleyParsons</strong> or its designated subsidiary will be required without any action by any other party, to exchange each<br />
Exchangeable Share for one Ordinary Share (subject to adjustments) <strong>and</strong> any declared <strong>and</strong> unpaid dividends on that<br />
Exchangeable Share.<br />
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<strong>Notice</strong>s<br />
<strong>WorleyParsons</strong> must give to the Exchangeable Shareholders:<br />
... advance notice <strong>of</strong> a voluntary or involuntary liquidation <strong>of</strong> <strong>WorleyParsons</strong>;<br />
... notices sent to Shareholders; <strong>and</strong><br />
... notice <strong>of</strong> the occurrence <strong>of</strong> a liquidation event in relation to CanCo.<br />
Compliance with other agreements<br />
Each Exchangeable Shareholder has a right to enforce <strong>com</strong>pliance by CanCo <strong>and</strong> <strong>WorleyParsons</strong> with their obligations under<br />
the Exchangeable Share Provisions, the Support Agreement, the Exchange Rights Agreement <strong>and</strong> the Voting Trust Agreement.<br />
<strong>WorleyParsons</strong> provides covenants in relation to the tradeability <strong>of</strong> Ordinary Shares delivered under the Exchange Rights<br />
Agreement <strong>and</strong> must <strong>com</strong>ply with the terms <strong>of</strong> certain ASIC <strong>and</strong> ASX relief sought in relation to the Acquisition.<br />
9.1.5 Voting Trust Agreement<br />
The Voting Trust Agreement between <strong>WorleyParsons</strong>, CanCo <strong>and</strong> the Trustee gives the Exchangeable Shareholders a right to<br />
direct the Trustee how to vote the votes attached to the Special Voting Share, if Shareholders have approved the issue <strong>of</strong> the<br />
Special Voting Share.<br />
Under the Voting Trust Agreement:<br />
... the Trustee must vote at a Shareholder meeting in the manner instructed by an Exchangeable Shareholder <strong>and</strong> appoint a<br />
proxy to vote in the manner instructed by the Exchangeable Shareholder;<br />
... an Exchangeable Shareholder is only entitled to instruct the Trustee in respect <strong>of</strong> the number <strong>of</strong> votes that would attach to<br />
the Ordinary Shares to be received by that Exchangeable Shareholder on exchange <strong>of</strong> its Exchangeable Shares;<br />
... <strong>WorleyParsons</strong> must send various materials to the Exchangeable Shareholders or arrange for the Trustee to do so; <strong>and</strong><br />
... <strong>WorleyParsons</strong> will pay all the fees <strong>and</strong> costs <strong>of</strong> the Trustee <strong>and</strong> indemnifies the Trustee against any claims, losses, damages,<br />
costs <strong>and</strong> expenses arising from its duties under the Voting Trust Agreement.<br />
Combinations etc.<br />
Until all the Exchangeable Shares are exchanged or purchased under the Exchangeable Share Provisions, <strong>WorleyParsons</strong> must<br />
not consummate any transaction (whether by statutory procedure such as an amalgamation, reorganisation, consolidation or<br />
merger or a transfer, sale or lease) whereby Canco <strong>and</strong> all or substantially all <strong>of</strong> <strong>WorleyParsons</strong>’ undertaking, property <strong>and</strong><br />
assets would be<strong>com</strong>e the property <strong>of</strong> another, or in the case <strong>of</strong> a merger, <strong>of</strong> the continuing corporation unless that other<br />
person assumes the responsibilities <strong>of</strong> <strong>WorleyParsons</strong> under the Voting Trust Agreement. This is subject to CanCo’s right to<br />
exchange, <strong>and</strong> <strong>WorleyParsons</strong> <strong>and</strong> its designated subsidiary’s right to purchase, the Exchangeable Shares.<br />
9.1.6 Special Voting Share terms <strong>of</strong> issue<br />
To allow <strong>WorleyParsons</strong> to issue the Special Voting Share, the Board has called an Extraordinary General <strong>Meeting</strong> to be held at<br />
2.00pm (AEST) on 2 April 2007 at which Shareholder approval for the issue is sought. The <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong> is provided in<br />
Section 10. The terms <strong>of</strong> issue <strong>of</strong> the Special Voting Share are set out in full in the Appendix to this Document. In summary, the<br />
Special Voting Share entitles the holder to the following:<br />
... Voting rights<br />
– a right to vote together as one class with the Shareholders in all the circumstances in which Shareholders have a right to<br />
vote, subject to <strong>WorleyParsons</strong>’ Constitution <strong>and</strong> applicable law; <strong>and</strong><br />
– an aggregate number <strong>of</strong> votes equal to the number <strong>of</strong> votes attached to Ordinary Shares into which the Exchangeable<br />
Shares are exchangeable.<br />
... <strong>Notice</strong>s <strong>and</strong> attendances<br />
– the same rights as Shareholders to receive notices, reports <strong>and</strong> financial statements <strong>and</strong> to attend <strong>and</strong> to speak at all<br />
general meetings.<br />
The Special Voting Share is also subject to the following restrictions:<br />
... no dividends or distributions: the holder <strong>of</strong> the Special Voting Share is not entitled to receive any dividend or distributions <strong>of</strong><br />
<strong>WorleyParsons</strong>; <strong>and</strong><br />
... no transfer: the Special Voting Share may not be transferred except in accordance with the Voting Trust Agreement,<br />
summarised in Section 9.1.5.<br />
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9.2 Additional debt funding<br />
9.2.1 Use <strong>of</strong> additional funds<br />
<strong>WorleyParsons</strong> has raised approximately $550 million in new debt finance facilities as part <strong>of</strong> the funding <strong>of</strong> the Acquisition by<br />
way <strong>of</strong> finance facilities with various banks. Of the $550 million, $333 million will be used for partially financing the Acquisition<br />
<strong>and</strong> to pay related transaction costs, $141 million will be used as temporary bridge finance for the retail <strong>com</strong>ponent <strong>of</strong> the<br />
Entitlement Offer <strong>and</strong> $76 million will be available for use for working capital <strong>and</strong> other purposes. <strong>WorleyParsons</strong> intends to<br />
refinance these facilities within the 12 months following <strong>com</strong>pletion <strong>of</strong> the Acquisition through longer-term facilities.<br />
The $141 million temporary bridge finance will be used to fund the difference between the Purchase Price <strong>and</strong> the sum <strong>of</strong> the<br />
Exchangeable Shares, Bridge Finance Facility <strong>and</strong> Institutional Entitlement Offer. This facility is to cover the shortfall in funds<br />
prior to settlement <strong>of</strong> the Retail Entitlement Offer, assuming the Acquisition <strong>com</strong>pletes before such settlement. The facility<br />
will be repaid once <strong>WorleyParsons</strong> receives the proceeds <strong>of</strong> the Retail Entitlement Offer.<br />
9.2.2 Summary <strong>of</strong> the Bridge Finance Agreement<br />
To cover part <strong>of</strong> the cost <strong>of</strong> the Acquisition, <strong>WorleyParsons</strong> <strong>and</strong> the Borrowers entered into a multi currency bridge <strong>and</strong><br />
revolving facilities agreement (Bridge Finance Agreement) with the Financiers in relation to the facilities described below:<br />
... a C$315 million term loan facility to finance the proposed Acquisition. Any loan under this facility must be repaid, at the<br />
latest, 364 days from the date <strong>of</strong> the Bridge Finance Agreement; <strong>and</strong><br />
... a A$200 million multi-currency revolving loan facility to fund working capital requirements <strong>of</strong> <strong>WorleyParsons</strong> <strong>and</strong> to fund<br />
other permitted acquisitions by members <strong>of</strong> the <strong>WorleyParsons</strong> Group (including on-lending amounts to, or investing in, other<br />
members <strong>of</strong> the <strong>WorleyParsons</strong> Group for those purposes). Any loan under this facility must be repaid, at the latest, 364 days<br />
from the date <strong>of</strong> the Bridge Finance Agreement,<br />
(together, the Facilities).<br />
The Bridge Finance Agreement contains m<strong>and</strong>atory prepayment provisions whereby <strong>WorleyParsons</strong> (<strong>and</strong> other Borrowers) are<br />
to repay the abovementioned loans in an amount equal to any cash consideration received from the issue, purchase or sale <strong>of</strong><br />
securities or medium or long-term financing instruments. There are also m<strong>and</strong>atory partial repayment provisions that are<br />
triggered upon certain levels <strong>of</strong> movement in foreign exchange.<br />
The documentation for the Facilities contains various conditions precedent, representations <strong>and</strong> warranties, general<br />
undertakings, negative pledges, undertakings to provide financial information <strong>and</strong> financial covenants given by <strong>WorleyParsons</strong><br />
(<strong>and</strong> other Borrowers), which are usual in facilities <strong>of</strong> this nature.<br />
The documentation for the Facilities also contains events <strong>of</strong> default, including the occurrence <strong>of</strong> any event or circumstance<br />
which has a material adverse effect on, among other things, the ability <strong>of</strong> <strong>WorleyParsons</strong> (<strong>and</strong> other Borrowers) to perform <strong>and</strong><br />
<strong>com</strong>ply with their obligations under the Facilities. If an event <strong>of</strong> default is continuing, the agent for the Financiers may declare<br />
that an amount equal to all or any part <strong>of</strong> the outst<strong>and</strong>ing loan is payable on dem<strong>and</strong> or immediately due for payment, <strong>and</strong>/or<br />
that the obligations <strong>of</strong> the Financiers are terminated.<br />
9.3 Summary <strong>of</strong> the Acquisition agreements<br />
9.3.1 Master Transaction Agreement<br />
The Vendors, <strong>WorleyParsons</strong>, CanCo, <strong>WorleyParsons</strong> Canada <strong>and</strong> Colt have entered into the Master Transaction Agreement<br />
for CanCo to acquire all <strong>of</strong> the issued <strong>and</strong> outst<strong>and</strong>ing partnership interests in the capital <strong>of</strong> Colt for C$1,035 million (subject to<br />
post-Completion adjustments based on the final audited balance sheet <strong>of</strong> Colt as at 1 February 2007).<br />
Conditions precedent<br />
Completion <strong>of</strong> the Master Transaction Agreement is conditional upon:<br />
... incorporating amendments to the constitution <strong>of</strong> CanCo to provide for the issue <strong>of</strong> Exchangeable Shares;<br />
... the provision <strong>of</strong> various agreements to the Vendors, including the Underwriting Agreement, the Bridge Finance Agreement,<br />
agreements relating to the Exchangeable Shares <strong>and</strong> key employment agreements;<br />
... the termination <strong>of</strong> all non-arm’s length indebtedness to Colt <strong>of</strong> its directors, <strong>of</strong>ficers, shareholders or employees;<br />
... no material damage occuring to material assets <strong>of</strong> Colt <strong>and</strong> its subsidiaries;<br />
... a pre-Acquisition reorganisation <strong>of</strong> Colt being <strong>com</strong>pleted so that the Vendors be<strong>com</strong>e the owners <strong>of</strong> all <strong>of</strong> the outst<strong>and</strong>ing<br />
units <strong>of</strong> interest;<br />
... Caravel be<strong>com</strong>es wholly owned by the Vendors <strong>and</strong> all obligations <strong>and</strong> liabilities <strong>of</strong> Colt pursuant to the royalty agreement<br />
described in Section 1.13 shall have been assumed by the Vendors;<br />
... a security agreement between the Vendors, Colt <strong>and</strong> others is terminated;<br />
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... various resolutions <strong>of</strong> the subsidiaries <strong>of</strong> Colt are passed in relation to past corporate actions; <strong>and</strong><br />
... other usual conditions precedent, including there being no material adverse change with respect to the Vendors <strong>and</strong> CanCo,<br />
the receipt <strong>of</strong> relevant documentation authorising the obligations under the agreement <strong>and</strong> obtaining <strong>of</strong> relevant regulatory<br />
approvals (described in Sections 9.21.1 <strong>and</strong> 9.21.2).<br />
Under the terms <strong>of</strong> the agreement, <strong>WorleyParsons</strong> is required to convene a meeting <strong>of</strong> Shareholders to approve the issue <strong>of</strong><br />
the Special Voting Share. However, obtaining Shareholder approval is not a condition precedent to <strong>com</strong>pletion <strong>of</strong> the<br />
Acquisition.<br />
Purchase Price<br />
The Purchase Price <strong>of</strong> C$1,035 million is to be satisfied by:<br />
... CanCo paying C$702 million in cash (payable to the Vendors <strong>and</strong> also through Colt to the Caravel Shareholders);<br />
... CanCo paying C$20 million in cash to the Escrow Agent (to be held under the Escrow Agreement); <strong>and</strong><br />
... CanCo issuing C$313 million worth <strong>of</strong> Exchangeable Shares to the Vendors (at the Institutional Bookbuild Price).<br />
<strong>WorleyParsons</strong> will issue the Special Voting Share to the Trustee, if <strong>and</strong> when approval by its Shareholders has been obtained.<br />
Completion<br />
Completion under the agreement will occur on 7 March 2007 unless all regulatory approvals have not been obtained by that<br />
date, in which case Completion will occur on the third Business Day following receipt <strong>of</strong> the last occurring regulatory approval.<br />
Representations <strong>and</strong> warranties<br />
Under the agreement, the Vendors have provided certain representations <strong>and</strong> warranties (both severally, <strong>and</strong> joint <strong>and</strong><br />
severally) in respect <strong>of</strong> the entry into the agreement, regulatory approvals, organisation, consents, <strong>and</strong> the conduct <strong>of</strong> the<br />
business <strong>of</strong> Colt <strong>and</strong> its subsidiaries. <strong>WorleyParsons</strong>, <strong>WorleyParsons</strong> Canada, CanCo <strong>and</strong> its affiliates are indemnified for any<br />
breach <strong>of</strong> any representation or warranty made in the agreement by the Vendors, for pre-Completion taxes <strong>and</strong> for liabilities in<br />
relation to the Vendor’s acquisition <strong>of</strong> Caravel.<br />
Unless a claim under the indemnities relates to a deficiency in title or is based on intentional misrepresentation or fraud, claims<br />
are limited as follows:<br />
... a two year limit in respect <strong>of</strong> any claim, other than a claim relating to tax matters;<br />
... the several liability <strong>of</strong> each <strong>of</strong> the Vendors is capped at their proportional interest in the cash in escrow <strong>and</strong> the current value<br />
<strong>of</strong> the Exchangeable Shares registered in their name (including the value <strong>of</strong> any derived property) that remain in escrow at<br />
the date <strong>of</strong> the claim; <strong>and</strong><br />
... the joint <strong>and</strong> several liability <strong>of</strong> all <strong>of</strong> the Vendors is capped at the amount <strong>of</strong> cash in escrow <strong>and</strong> the current value <strong>of</strong> the<br />
Exchangeable Shares (including the value <strong>of</strong> any derived property) that remain in escrow at the date <strong>of</strong> the claim.<br />
Under the agreement, <strong>WorleyParsons</strong>, <strong>WorleyParsons</strong> Canada <strong>and</strong> CanCo also provide certain representations <strong>and</strong> warranties<br />
regarding the entry into the agreement, regulatory approvals, organisation, authorisations, the issuance <strong>of</strong> the Exchangeable<br />
Shares, Shares <strong>and</strong> Special Voting Share, financing arrangements <strong>and</strong> tax status <strong>of</strong> CanCo. The Vendors are indemnified for any<br />
breach <strong>of</strong> any representation or warranty made in the agreement by <strong>WorleyParsons</strong> or <strong>WorleyParsons</strong> Canada, <strong>and</strong> for certain<br />
pre-Completion taxes. Any liability <strong>of</strong> <strong>WorleyParsons</strong>, <strong>WorleyParsons</strong> Canada <strong>and</strong> CanCo is subject to similar limitations as the<br />
joint <strong>and</strong> several liability cap on the Vendors described above.<br />
Termination<br />
The agreement can be terminated:<br />
... if the conditions precedent are not fulfilled; or<br />
... Completion has not occurred by 20 April 2007.<br />
9.3.2 Escrow Agreement<br />
The Escrow Agreement is between CanCo, an agent for the Vendors <strong>and</strong> the Escrow Agent. Under the terms <strong>of</strong> the agreement,<br />
the Escrow Agent will hold C$20 million <strong>of</strong> the Purchase Price <strong>and</strong> C$284 million <strong>of</strong> the Exchangeable Shares in escrow.<br />
The C$20 million escrowed funds will be released two years from the date <strong>of</strong> the agreement. One-third <strong>of</strong> the escrowed<br />
Exchangeable Shares (<strong>and</strong> any rights or property derived from the escrowed Exchangeable Shares), will be released on each <strong>of</strong><br />
the dates 12 months, 18 months <strong>and</strong> 24 months from Completion, respectively. Prior to release, the escrowed Exchangeable<br />
Shares generally may not be exchanged or sold. There is an exception allowing exchange <strong>and</strong> sale in the event <strong>of</strong> a takeover bid<br />
for <strong>WorleyParsons</strong> fulfilling all <strong>of</strong> the conditions in ASX Listing Rules 9.18.2 <strong>and</strong> 9.18.3, but any proceeds must continue to be<br />
held in escrow.<br />
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9.4 Summary <strong>of</strong> the Underwriting Agreement<br />
<strong>WorleyParsons</strong> <strong>and</strong> the Underwriter have entered into the Underwriting Agreement under which the Underwriter will fully<br />
underwrite the Entitlement Offer at the Application Price. The Underwriter may at its cost appoint sub-underwriters to<br />
sub-underwrite the Entitlement Offer in its absolute discretion.<br />
Representations, warranties <strong>and</strong> undertaking<br />
<strong>WorleyParsons</strong> gives various representations <strong>and</strong> warranties under the Underwriting Agreement including that this Document<br />
<strong>com</strong>plies with the Corporations Act <strong>and</strong> the Listing Rules in all material respects <strong>and</strong> that the New Shares will be validly issued<br />
<strong>and</strong> free <strong>of</strong> all encumbrances other than those provided for in the Constitution.<br />
The Underwriting Agreement imposes various obligations on <strong>WorleyParsons</strong>, including that <strong>WorleyParsons</strong> will not breach in<br />
any material respect, the Corporations Act, any other applicable laws, the Listing Rules, its Constitution, any legally binding<br />
requirement by ASIC or ASX or its obligations under the Master Transaction Agreement to an extent that is material to<br />
<strong>WorleyParsons</strong>, this Document (<strong>and</strong> associated documentation), the out<strong>com</strong>e <strong>of</strong> the Entitlement Offer or the <strong>com</strong>pletion <strong>of</strong><br />
the Acquisition.<br />
<strong>WorleyParsons</strong> has undertaken that it will not without the prior consent <strong>of</strong> the Underwriter (such consent not to be<br />
unreasonably withheld or delayed), allot or agree to allot or indicate that it may or will allot any Ordinary Shares or other<br />
securities that represent the right to receive equity <strong>of</strong> <strong>WorleyParsons</strong> or any member <strong>of</strong> the <strong>WorleyParsons</strong> Group within<br />
90 days after the Final Allotment Date other than in certain excluded circumstances. <strong>WorleyParsons</strong> also undertakes to use<br />
its best endeavours to ensure the lodgement <strong>of</strong> this <strong>Prospectus</strong> with ASIC <strong>and</strong> not, subject to <strong>WorleyParsons</strong>’ right to<br />
terminate the Underwriting Agreement if the Master Transaction Agreement is terminated, withdraw the Entitlement Offer<br />
after the Institutional Allotment Date.<br />
Fees <strong>and</strong> Expenses<br />
Subject to the Underwriter having performed its obligations under the Underwriting Agreement, <strong>WorleyParsons</strong> will pay to the<br />
Underwriter a base fee <strong>of</strong> 1.75% <strong>of</strong> the aggregate amount paid by investors under the Entitlement Offer <strong>and</strong> an incentive fee<br />
<strong>of</strong> 0.5% <strong>of</strong> that aggregate amount (payable at <strong>WorleyParsons</strong>’ discretion).<br />
<strong>WorleyParsons</strong> is responsible for the reasonable costs <strong>of</strong>, <strong>and</strong> incidental to, the Entitlement Offer.<br />
Any sub-underwriting fees in relation to the Entitlement Offer are the responsibility <strong>of</strong> the Underwriter.<br />
Indemnity<br />
<strong>WorleyParsons</strong> has agreed to indemnify the Underwriter including its affiliates, <strong>of</strong>ficers, employees, advisors <strong>and</strong> Related<br />
Bodies Corporate (Indemnified Parties) for any claims, dem<strong>and</strong>s, damages, losses, costs, expenses <strong>and</strong> liabilities as a result <strong>of</strong><br />
the making <strong>of</strong> the Entitlement Offer, this Document, associated public documents, the representations <strong>and</strong> warranties in the<br />
Underwriting Agreement, a breach by <strong>WorleyParsons</strong> <strong>of</strong> its obligations under the Underwriting Agreement <strong>and</strong> any regulatory<br />
review in relation to the Entitlement Officer <strong>and</strong> this Document except that the indemnity will not apply where the claims,<br />
dem<strong>and</strong>s, damages, losses, costs, expenses <strong>and</strong> liabilities result primarily from the fraud, recklessness, wilful misconduct or<br />
negligence <strong>of</strong>, or breach <strong>of</strong> this agreement by, the Indemnified Party or any penalty or fine which that Indemnified Party is<br />
required to pay for any contravention <strong>of</strong> law or any amount in respect <strong>of</strong> which the indemnity would be illegal, void or<br />
unenforceable under any law.<br />
Termination<br />
The Underwriter may terminate its obligations under the Underwriting Agreement if at any time before Completion, one or<br />
more <strong>of</strong> the following events occur.<br />
... <strong>Notice</strong>: a person gives notice under section 730(1)(a) or (b) <strong>of</strong> the Corporations Act in relation to the <strong>Prospectus</strong>;<br />
... Supplementary prospectus: <strong>WorleyParsons</strong> lodges a supplementary prospectus with ASIC in a form not approved by the<br />
Underwriter;<br />
... Quotation approvals: approval is refused or not granted, or approval is granted subject to conditions other than customary<br />
conditions, to either the <strong>of</strong>ficial quotation <strong>of</strong> all <strong>of</strong> the New Shares issued in connection with the Entitlement Offer on ASX<br />
on or before the applicable approval deadline, or if granted, the approval is subsequently withdrawn, qualified or withheld;<br />
... Listing: <strong>WorleyParsons</strong> ceases to be admitted on the <strong>of</strong>ficial list <strong>of</strong> ASX, the Shares cease to be quoted or the trading <strong>of</strong><br />
Shares is suspended other than as contemplated as part <strong>of</strong> the Entitlement Offer process;<br />
... ASIC stop order: ASIC issues an order under section 739(1) <strong>of</strong> the Corporations Act;<br />
... ASIC notification: an application is made by ASIC for an order under Part 9.5 <strong>of</strong> the Corporations Act or ASIC <strong>com</strong>mences any<br />
investigation or hearing under Part 3 <strong>of</strong> the Australian Securities <strong>and</strong> Investments Commission Act 2001 (Cth) in relation to<br />
the Entitlement Offer or this Document;<br />
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... Withdrawal <strong>of</strong> consent: any person (other than the Underwriter) gives a notice under section 733(3) <strong>of</strong> the Corporations<br />
Act or any person (other than the Underwriter) who has previously consented to the inclusion <strong>of</strong> its name in this Document<br />
(or a supplementary prospectus) or to be named in this Document withdraws that consent;<br />
... Withdrawal <strong>of</strong> Document: <strong>WorleyParsons</strong> withdraws this Document or the Entitlement Offer;<br />
... Disruption to financial markets: any <strong>of</strong> the following occurs:<br />
– a general moratorium on <strong>com</strong>mercial banking activities in Australia, the US or the United Kingdom is declared by the<br />
relevant central banking authority in any <strong>of</strong> those countries, or there is a material disruption in <strong>com</strong>mercial banking or<br />
security settlement or clearance services in any <strong>of</strong> those countries; or<br />
– trading in all securities quoted or listed on ASX, the London Stock Exchange or the New York Stock Exchange is suspended<br />
or limited in a material respect for one day on which that exchange is open for trading,<br />
the effect <strong>of</strong> which is such as to make it, in the opinion <strong>of</strong> the Underwriter impracticable to market the Entitlement Offer or<br />
enforce contracts to issue or sell (as applicable) the New Shares;<br />
... Closing certificate: <strong>WorleyParsons</strong> does not provide a certificate in the prescribed form as <strong>and</strong> when required under the<br />
Underwriting Agreement certifying, among other things, <strong>com</strong>pliance with its obligations under the Underwriting Agreement<br />
or a statement in such certificate is untrue or in<strong>com</strong>plete in a material respect;<br />
... Lodgement: <strong>WorleyParsons</strong> fails to lodge the Document by the lodgement date;<br />
... Timetable: the Entitlement Offer is not conducted in accordance with the timetable as set out under the Underwriting<br />
Agreement where the Underwriter has reasonable <strong>and</strong> bona fide grounds to believe <strong>and</strong> does believe that such a deviation:<br />
– will, or is likely to, materially increase the likelihood that the Underwriter has to subscribe for New Shares under the<br />
agreement;<br />
– will, or is likely to, materially adversely affect the value <strong>of</strong> Shares held by the Underwriter;<br />
– has or is likely to have a material adverse effect on the success or settlement <strong>of</strong> the Entitlement Offer; or<br />
– would give rise to a liability <strong>of</strong> the Underwriter in any capacity under any law, contract (relating to the Entitlement<br />
Offer), rule (relating to the Entitlement Offer), regulation or treaty;<br />
... Other events: any <strong>of</strong> the following events occur <strong>and</strong> the Underwriter reasonably determines that the event has or is likely<br />
to have a material adverse effect on the success or settlement <strong>of</strong> the Entitlement Offer or would give rise to a liability <strong>of</strong> the<br />
Underwriter under any law, regulation or treaty:<br />
– <strong>Notice</strong>: any person gives a notice under section 730(1)(c) <strong>of</strong> the Corporations Act in relation to this Document;<br />
– Inadequate disclosure:<br />
– a statement contained in any document used to conduct the Entitlement Offer (including this Document) is or be<strong>com</strong>es<br />
misleading or deceptive, or a matter is omitted from these documents having regard to the Corporations Act; or<br />
– the due diligence report or other information supplied by or on behalf <strong>of</strong> <strong>WorleyParsons</strong> to the Underwriter in relation to<br />
the <strong>WorleyParsons</strong> Group or the Entitlement Offer in aggregate, is or be<strong>com</strong>es misleading or deceptive;<br />
– New circumstances: a new circumstance arises since the date <strong>of</strong> this Document that would have been required to be<br />
included in this Document if it had arisen before the Document was lodged;<br />
– Adverse change: there is an adverse change in the assets, liabilities, financial position or performance, pr<strong>of</strong>its, losses or<br />
prospects <strong>of</strong> <strong>WorleyParsons</strong> or <strong>of</strong> Colt from that disclosed in this Document;<br />
– Change <strong>of</strong> law: there is introduced, or there is a public announcement <strong>of</strong> a proposal to introduce, into the Parliament <strong>of</strong><br />
Australia or any State <strong>of</strong> Australia a new law, or the Reserve Bank <strong>of</strong> Australia, or any Commonwealth <strong>of</strong> State authority,<br />
adopts or announces a proposal to adopt a new policy, any <strong>of</strong> which does or is likely to prohibit or regulate the Entitlement<br />
Offer, capital issues or stock markets;<br />
– Insolvency events: any <strong>of</strong> the following occur in relation to any member <strong>of</strong> the <strong>WorleyParsons</strong> Group:<br />
– an order or application is made, or a resolution is passed, for its winding up, dissolution, <strong>of</strong>ficial management or<br />
administration;<br />
– any proceedings or arrangements for its liquidation or the appointment <strong>of</strong> a receiver are instituted;<br />
– a receiver, a receiver <strong>and</strong> manager, administrator or similar <strong>of</strong>ficer is appointed, or a distress or execution is levied, over<br />
its assets;<br />
– it suspends payment <strong>of</strong> its debts or is unable to pay its debts as <strong>and</strong> when they fall due; or<br />
– it makes or <strong>of</strong>fers to make an arrangement with its creditors or a class <strong>of</strong> them;<br />
– Change in Board: a change in the Board occurs, other than a change referred to in this Document;<br />
– Prosecution: a Director is charged with an indictable <strong>of</strong>fence, any government agency <strong>com</strong>mences any public action<br />
against <strong>WorleyParsons</strong> or its Directors, or announces that it intends to take such action or a Director is disqualified from<br />
managing a corporation under the Corporations Act;<br />
– Regulatory <strong>com</strong>pliance: contravention by <strong>WorleyParsons</strong> or any entity in the <strong>WorleyParsons</strong> Group <strong>of</strong> the Corporations<br />
Act, its Constitution or any <strong>of</strong> the Listing Rules;<br />
– Default: <strong>WorleyParsons</strong> defaults in the performance <strong>of</strong> any <strong>of</strong> its obligations under the Underwriting Agreement; or<br />
– Representations <strong>and</strong> warranties: a representation or warranty contained in the Underwriting Agreement on the part <strong>of</strong><br />
<strong>WorleyParsons</strong> is or be<strong>com</strong>es not true or correct.<br />
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If the Underwriter terminates the Underwriting Agreement, subject to the Underwriter also <strong>com</strong>plying with its obligations<br />
under the agreement, any such termination will not affect <strong>WorleyParsons</strong>’ obligation to pay the Underwriter its fees for<br />
services already provided.<br />
9.5 Royalty agreement<br />
<strong>WorleyParsons</strong> has entered into a royalty agreement <strong>and</strong> has agreed to pay to the Vendors a proportion <strong>of</strong> any royalties<br />
received in respect <strong>of</strong> licensing agreements entered into in respect <strong>of</strong> certain intellectual property rights for a period <strong>of</strong><br />
seven years.<br />
9.6 Summary <strong>of</strong> hedging arrangements<br />
<strong>WorleyParsons</strong> has hedged its exposure to movements in the Canadian dollar against the Australian dollar between the date <strong>of</strong><br />
the announcement <strong>of</strong> the Acquisition (8 February 2007) <strong>and</strong> the receipt <strong>of</strong> proceeds under the Institutional Entitlement Offer<br />
(20 February 2007) <strong>and</strong> Retail Entitlement Offer (14 March 2007), for the $480 million being raised under the two <strong>of</strong>fers. The<br />
hedging is being conducted through an Australian dollar put option <strong>and</strong> a Canadian dollar call option at strike prices <strong>of</strong> C$0.905.<br />
9.7 Litigation <strong>and</strong> material disputes<br />
9.7.1 Colt litigation <strong>and</strong> material disputes<br />
Colt is from time to time, engaged in disputes with third parties, some <strong>of</strong> which involve litigation.<br />
Two actions are pending with Alliance Pipeline in relation to the design <strong>of</strong> a pipeline from Northern Alberta to Chicago, which<br />
may, in aggregate be considered material. These actions total C$10.9 million. The project has an insurance policy <strong>and</strong> the<br />
insurer is currently responding to these claims <strong>and</strong> paying the costs <strong>of</strong> the defence. Colt’s corporate insurance program is<br />
available if the project policy is not sufficient.<br />
9.7.2 <strong>WorleyParsons</strong> Group litigation <strong>and</strong> material disputes<br />
Members <strong>of</strong> the <strong>WorleyParsons</strong> Group are, from time to time, engaged in disputes with third parties, some <strong>of</strong> which involve<br />
litigation. However, to the knowledge <strong>of</strong> the Directors, neither <strong>WorleyParsons</strong> nor any <strong>of</strong> its Subsidiaries is presently involved in<br />
any litigation which the Directors believe has, or is likely to have a material adverse effect on its business operations or those <strong>of</strong><br />
its Subsidiaries, having regard, among other things, to the expected out<strong>com</strong>e <strong>of</strong> the litigation <strong>and</strong> (should such out<strong>com</strong>es be<br />
adverse to <strong>WorleyParsons</strong>) the ability <strong>of</strong> <strong>WorleyParsons</strong> to claim indemnity under the term <strong>of</strong> its insurance policies.<br />
The Directors are aware <strong>of</strong> the possibility <strong>of</strong> a claim for remediation work by a customer in relation to an oil <strong>and</strong> gas project.<br />
However, <strong>WorleyParsons</strong> has insurance in relation to the project <strong>and</strong>, should litigation <strong>com</strong>mence, the Directors do not consider<br />
that the proceedings would be likely to have a material adverse effect on the business.<br />
9.8 Nature <strong>of</strong> this Document<br />
This Document is a prospectus for continuously quoted securities. The information in this Document principally concerns the<br />
terms <strong>and</strong> conditions <strong>of</strong> the Entitlement Offer <strong>and</strong> information necessary for investors to make an informed assessment <strong>of</strong>:<br />
... the effect <strong>of</strong> the Entitlement Offer on <strong>WorleyParsons</strong>; <strong>and</strong><br />
... the rights <strong>and</strong> liabilities attaching to the New Shares.<br />
This Document does not include all <strong>of</strong> the information that would be included in a document for an initial public <strong>of</strong>fering <strong>of</strong><br />
securities in an entity not already listed on ASX. <strong>WorleyParsons</strong> has been listed on ASX since November 2002. During this time,<br />
<strong>WorleyParsons</strong> has been subject to disclosure requirements under the Corporations Act <strong>and</strong> the Listing Rules.<br />
<strong>WorleyParsons</strong> has, since listing, provided ASX with a substantial amount <strong>of</strong> information regarding its activities <strong>and</strong> that<br />
information is publicly available. This Document is intended to be read in conjunction with that publicly available information.<br />
Therefore, Qualifying Shareholders considering subscribing for New Shares should also have regard to that publicly available<br />
information before making any investment decision.<br />
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9.9 Reporting <strong>and</strong> disclosure obligations<br />
<strong>WorleyParsons</strong> is a “disclosing entity” for the purposes <strong>of</strong> Part 1.2A <strong>of</strong> the Corporations Act. As a disclosing entity, it is subject<br />
to regular reporting <strong>and</strong> disclosure obligations under the Corporations Act <strong>and</strong> Listing Rules. Broadly, these obligations require:<br />
... the preparation <strong>of</strong> both yearly <strong>and</strong> half yearly financial statements, a report on the operations <strong>of</strong> <strong>WorleyParsons</strong> during the<br />
relevant accounting period together with an audit or review report thereon by <strong>WorleyParsons</strong>’ auditor; <strong>and</strong><br />
... immediate notification <strong>of</strong> ASX <strong>of</strong> any information concerning <strong>WorleyParsons</strong> which it be<strong>com</strong>es aware <strong>of</strong> <strong>and</strong> which a<br />
reasonable person would expect to have a material effect on the price or value <strong>of</strong> Ordinary Shares, subject to certain<br />
exceptions.<br />
9.10 Availability <strong>of</strong> other documents<br />
Copies <strong>of</strong> documents lodged with ASIC in relation to <strong>WorleyParsons</strong> may be obtained from, or inspected at, the <strong>of</strong>fices <strong>of</strong> ASIC.<br />
<strong>WorleyParsons</strong> will provide, or cause to be provided, a copy <strong>of</strong> each <strong>of</strong> the following documents, free <strong>of</strong> charge, to any person<br />
on request until the Final Allotment Date:<br />
... <strong>WorleyParsons</strong>’ financial report for the six months ended 31 December 2006 (being the half yearly financial report most<br />
recently lodged with ASIC by <strong>WorleyParsons</strong> before the issue <strong>of</strong> this Document);<br />
... <strong>WorleyParsons</strong>’ annual financial report for the year ended 30 June 2006 (being the annual financial report most recently<br />
lodged with ASIC by <strong>WorleyParsons</strong> before the issue <strong>of</strong> this Document);<br />
... any continuous disclosure notices given by <strong>WorleyParsons</strong> to ASX after the lodgement <strong>of</strong> the annual financial report for the<br />
period ended 30 June 2006 <strong>and</strong> before the lodgement <strong>of</strong> this Document with ASIC; <strong>and</strong><br />
... the Constitution <strong>of</strong> <strong>WorleyParsons</strong>.<br />
All requests for copies <strong>of</strong> the above documents should be addressed to the Company Secretary, <strong>WorleyParsons</strong> Limited, Level 7,<br />
116 Miller Street, North Sydney NSW 2060 or by phoning the <strong>WorleyParsons</strong> Entitlement Offer InfoLine on 1300 738 801<br />
(Australia) or 61 3 9415 4601 (International).<br />
The above information may also be obtained from <strong>WorleyParsons</strong>’ website at www.worleyparsons.<strong>com</strong> or from ASX.<br />
9.11 Rights <strong>and</strong> liabilities attaching to New Shares<br />
The rights attaching to New Shares are:<br />
... set out in the Constitution, a copy <strong>of</strong> which is available by making a request in the manner set out in Section 9.10; <strong>and</strong><br />
... in certain circumstances, regulated by the Corporations Act, Listing Rules, the ASTC Settlement Rules <strong>and</strong> the general law.<br />
The following is a summary <strong>of</strong> the principal rights <strong>of</strong> Shareholders.<br />
Voting<br />
At a general meeting, every Shareholder present in person or by proxy, attorney or representative has one vote on a show <strong>of</strong><br />
h<strong>and</strong>s <strong>and</strong> on a poll every Shareholder present has one vote for each ordinary share held. On a poll, partly paid shares confer a<br />
fraction <strong>of</strong> a vote pro rata to the amount paid up. Voting at any meeting <strong>of</strong> Shareholders is by a show <strong>of</strong> h<strong>and</strong>s unless a poll is<br />
dem<strong>and</strong>ed in the manner described in the Constitution.<br />
The quorum required for a meeting <strong>of</strong> Shareholders is two Shareholders or if only one Shareholder is entitled to vote, that<br />
Shareholder. In the case <strong>of</strong> an equality <strong>of</strong> votes upon any proposed resolution, the Chairperson <strong>of</strong> the meeting, in addition to his<br />
or her deliberative vote, has a casting vote.<br />
General meetings<br />
Each Shareholder is entitled to receive notice <strong>of</strong> <strong>and</strong>, except in certain circumstances, to attend <strong>and</strong> vote at general meetings<br />
<strong>of</strong> <strong>WorleyParsons</strong> <strong>and</strong> to receive all financial statements, notices <strong>and</strong> other documents required to be sent to Shareholders<br />
under the Constitution or Corporations Act.<br />
Dividends<br />
The Directors may from time to time pay dividends to Shareholders out <strong>of</strong> the pr<strong>of</strong>its <strong>of</strong> <strong>WorleyParsons</strong>. The payment <strong>of</strong> a<br />
dividend does not require any confirmation by general meeting.<br />
New Shares issued will not be entitled to the dividend for the half year ended 31 December 2006 <strong>of</strong> 28 cents per Share. New<br />
Shares will rank equally for all dividends from the date <strong>of</strong> Allotment.<br />
Subject to any special terms <strong>and</strong> conditions <strong>of</strong> issue, all dividends must be paid to Shareholders in proportion to the number <strong>of</strong>,<br />
<strong>and</strong> the amounts paid on, Ordinary Shares held.<br />
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Issue <strong>of</strong> shares<br />
The Directors may (subject to the restrictions on the issue <strong>of</strong> Ordinary Shares imposed by the Constitution <strong>and</strong> Listing Rules)<br />
issue or grant options in respect <strong>of</strong>, or otherwise dispose <strong>of</strong>, Ordinary Shares to such persons, for such price, on such conditions,<br />
at such times <strong>and</strong> with such preferred, deferred or other special rights or special restrictions, whether with regard to dividend,<br />
voting, return <strong>of</strong> capital, participation in the property <strong>of</strong> <strong>WorleyParsons</strong> on a winding up or otherwise, as the Directors think fit.<br />
Transfer <strong>of</strong> shares<br />
Subject to the Constitution, Ordinary Shares are freely transferable. Shareholders may transfer them by an instrument in<br />
writing in any usual or <strong>com</strong>mon form, or in any other form that the Directors approve <strong>and</strong>, while <strong>WorleyParsons</strong> is a listed<br />
<strong>com</strong>pany, Ordinary Shares may be transferred electronically in accordance with the ASTC Settlement Rules.<br />
The Directors may decline to register an instrument <strong>of</strong> transfer where the transfer is not in registrable form or the refusal to<br />
register the transfer is permitted under the Listing Rules. Subject to the Listing Rules <strong>and</strong> ASTC Settlement Rules, while<br />
<strong>WorleyParsons</strong> is a listed <strong>com</strong>pany the Directors may suspend the registration <strong>of</strong> transfers at such times <strong>and</strong> for such periods,<br />
not exceeding in total 30 days in any year, as they think fit.<br />
Winding up<br />
Ordinary Shares rank equally in the event <strong>of</strong> a winding up. Subject to the Constitution <strong>and</strong> to the rights attaching to any shares<br />
or classes <strong>of</strong> shares, a liquidator in a winding up may, with the sanction <strong>of</strong> a special resolution <strong>of</strong> Shareholders, distribute among<br />
the Shareholders the whole or any part <strong>of</strong> the property <strong>of</strong> <strong>WorleyParsons</strong>.<br />
9.12 Tax implications <strong>of</strong> the Entitlement Offer<br />
The following <strong>com</strong>ments concerning the in<strong>com</strong>e tax implications arising for <strong>WorleyParsons</strong> Shareholders are general in nature<br />
<strong>and</strong> deal only with Australian in<strong>com</strong>e tax implications for Australian tax residents. Accordingly, all persons should seek <strong>and</strong> rely<br />
upon their own taxation advice as to the possible tax consequences arising in connection with the Entitlement Offer <strong>and</strong> New<br />
Shares acquired under the Entitlement Offer. None <strong>of</strong> <strong>WorleyParsons</strong> nor any <strong>of</strong> its <strong>of</strong>ficers, nor its taxation or other advisors,<br />
accepts any liability or responsibility in respect <strong>of</strong> any statement concerning taxation consequences, or in respect <strong>of</strong> the<br />
taxation consequences themselves.<br />
It should be noted that there may be changes in tax laws, policy <strong>and</strong> practice which may affect the Shareholder’s tax position.<br />
9.12.1 Australian tax implications<br />
The following <strong>com</strong>ments do not apply to investors who carry on a business <strong>of</strong> trading in shares, or otherwise hold shares on<br />
revenue account. These <strong>com</strong>ments are based on the Australian in<strong>com</strong>e tax laws in force at the time <strong>of</strong> issue <strong>of</strong> this <strong>Prospectus</strong>.<br />
The precise taxation implications will depend upon each Shareholder’s specific circumstances.<br />
Capital gains are taxed in Australia. A capital gain generally arises when an asset is disposed <strong>of</strong> <strong>and</strong> the capital proceeds exceed<br />
the total cost <strong>of</strong> acquiring the asset. Conversely, a capital loss generally arises if the total cost exceeds the capital proceeds<br />
received. The Entitlement, <strong>and</strong> any New Shares acquired under the Entitlement Offer, are assets for capital gains tax (CGT)<br />
purposes.<br />
A net capital gain is generally included in the assessable in<strong>com</strong>e <strong>of</strong> the taxpayer, <strong>and</strong> the taxpayer may be subject to tax on<br />
the capital gain or the discounted capital gain (for certain types <strong>of</strong> taxpayers who have held the relevant asset for at least<br />
12 months). The amount <strong>of</strong> tax payable will depend upon the taxpayer’s particular in<strong>com</strong>e tax pr<strong>of</strong>ile. For instance, an<br />
individual may have to pay tax up to the top marginal tax rate (currently 45%) plus the Medicare levy (currently 1.5%) on any<br />
capital gain. A <strong>com</strong>pany may have to pay tax <strong>of</strong> up to 30% on any capital gain.<br />
9.12.2 Granting <strong>of</strong> Entitlement<br />
The granting <strong>of</strong> an Entitlement under the Entitlement Offer should not constitute an assessable dividend for Australian in<strong>com</strong>e<br />
tax purposes nor will it give rise to any immediate in<strong>com</strong>e tax or CGT liability for the Shareholders.<br />
9.12.3 Sale <strong>of</strong> Entitlement through a Bookbuild<br />
Where an Australian tax resident Shareholder sells their Entitlement through the Institutional Bookbuild or the Retail Bookbuild,<br />
or does nothing, the Entitlement will be sold on the Shareholder’s behalf under either <strong>of</strong> the two Bookbuilds or acquired by UBS<br />
pursuant to the Underwriting Agreement.<br />
Where a Shareholder receives proceeds in respect <strong>of</strong> the disposal <strong>of</strong> their Entitlement, a capital gain could arise equal to the<br />
amount by which the capital proceeds received for the disposal <strong>of</strong> the Entitlement exceeds any non-deductible incidental costs<br />
incurred in disposing <strong>of</strong> the Entitlement.<br />
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Section 9 Additional information continued<br />
If the Shareholder receives no proceeds or the proceeds received are less than any non-deductible incidental costs incurred in<br />
disposing <strong>of</strong> the Entitlement, a capital loss could arise equal to the non-deductible incidental costs less the proceeds received<br />
(if any).<br />
The Entitlement is deemed to be acquired when the Existing Shares to which the Entitlement relates were acquired. Where the<br />
Existing Shares were acquired on or after 20 September 1985, any capital gain arising for individuals <strong>and</strong> entities acting as<br />
trustees in respect <strong>of</strong> the disposal <strong>of</strong> the Entitlement may be reduced by 50% if the Existing Shares to which the Entitlement<br />
relates were held for at least 12 months before the date <strong>of</strong> disposal <strong>of</strong> the Entitlement. For a <strong>com</strong>plying superannuation entity,<br />
any capital gain may be reduced by 33 1 /3% if the Existing Shares to which the Entitlement relates were held for at least<br />
12 months before the date <strong>of</strong> disposal <strong>of</strong> the Entitlement.<br />
9.12.4 Acquisition <strong>of</strong> New Shares by taking up Entitlement<br />
Where all or a part <strong>of</strong> the Entitlement is exercised, this should not give rise to an in<strong>com</strong>e tax or CGT liability, irrespective <strong>of</strong><br />
whether the Entitlement was issued to Existing Shareholders or purchased under the Institutional Bookbuild or the Retail<br />
Bookbuild.<br />
For Qualifying Shareholders, the total cost base <strong>of</strong> the New Shares acquired on exercising the Entitlement will equal the total<br />
amount paid to acquire the New Shares (i.e. the Application Price), plus any non-deductible incidental costs incurred to acquire<br />
them.<br />
For other Shareholders that acquire New Shares, the total cost base <strong>of</strong> the New Shares acquired will equal the aggregate <strong>of</strong><br />
the amount paid to acquire the New Shares (i.e. the Application Price), the amount paid to acquire the Entitlement <strong>and</strong> any<br />
non-deductible incidental costs incurred to acquire them.<br />
9.12.5 Disposal <strong>of</strong> New Shares<br />
Where the New Shares are subsequently sold, a capital gain will arise where the capital proceeds received exceed the<br />
Shareholder’s tax cost base. A capital loss will arise where the Shareholder’s tax cost base exceeds the capital proceeds.<br />
All capital gains <strong>and</strong> capital losses arising in an in<strong>com</strong>e year are added together to determine whether an Existing Shareholder<br />
has derived a net capital gain or incurred a net capital loss during that year.<br />
Where the Shareholder is an individual or a trustee (including <strong>of</strong> a <strong>com</strong>plying superannuation fund) <strong>and</strong> the Existing Shares are<br />
sold within the 12 month period <strong>com</strong>mencing from the date the New Shares are acquired, the Shareholder will not be eligible to<br />
receive the CGT discount.<br />
Any capital gain arising to individuals <strong>and</strong> entities acting as trustees (other than a trust that is a <strong>com</strong>plying superannuation<br />
entity) in respect <strong>of</strong> the disposal <strong>of</strong> New Shares may be reduced by 50% after <strong>of</strong>fsetting current year or prior year capital<br />
losses, if the shares were held for more than 12 months after the date the New Shares are acquired. For a <strong>com</strong>plying<br />
superannuation entity, the capital gain may be reduced by 33 1 /3% after <strong>of</strong>fsetting current year or prior year capital losses, if the<br />
shares were held for more than 12 months after the date the New Shares are acquired.<br />
The New Shares acquired under the Entitlement Offer will be treated for CGT purposes as having been acquired by the<br />
Shareholder on the day on which the Shareholder exercised their Entitlement. Similarly, this shall be the case where the<br />
Shareholder purchases the Entitlement from another party.<br />
9.13 Jurisdictions outside Australia<br />
This Document does not constitute an <strong>of</strong>fer or invitation to:<br />
... any shareholder with their registered address outside Australia <strong>and</strong> New Zeal<strong>and</strong> (other than a Qualifying Institutional<br />
Shareholder) unless <strong>WorleyParsons</strong> otherwise permits;<br />
... any person in the US or any US person as defined in Regulation S <strong>of</strong> the US Securities Act, or any other persons acting for<br />
the account or benefit <strong>of</strong> a US person (other than pursuant to a transaction exempt from registration under the US<br />
Securities Act <strong>and</strong> applicable US state securities laws); or<br />
... any person in any jurisdiction to whom it is unlawful to make such <strong>of</strong>fer or invitation having regard to the laws <strong>of</strong> that<br />
jurisdiction,<br />
(each, a Foreign Person).<br />
No action has been taken to register or qualify the New Shares that are the subject <strong>of</strong> the Entitlement Offer, or otherwise to<br />
permit a public <strong>of</strong>fering <strong>of</strong> the New Shares, in any jurisdiction outside Australia. The Ordinary Shares have not been, <strong>and</strong> will not<br />
be, registered under the US Securities Act <strong>and</strong> may not be <strong>of</strong>fered or sold in the US except in transactions exempt from the<br />
registration requirements <strong>of</strong> the US Securities Act <strong>and</strong> applicable state securities laws.<br />
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The distribution <strong>of</strong> this Document (including an electronic copy) in jurisdictions outside Australia may be restricted by law <strong>and</strong><br />
persons who enter into possession <strong>of</strong> it should seek advice on, <strong>and</strong> observe, any such restrictions. Any failure to <strong>com</strong>ply with<br />
such restrictions may constitute a violation <strong>of</strong> applicable securities laws.<br />
Each Applicant in the Entitlement Offer will be taken to have represented, warranted <strong>and</strong> agreed as follows:<br />
... the Applicant is not acting for the account or benefit <strong>of</strong> a Foreign Person; <strong>and</strong><br />
... the Applicant will not <strong>of</strong>fer or sell the New Shares in the US or in any other jurisdiction outside Australia except in<br />
transactions exempt from registration under the US Securities Act <strong>and</strong> applicable US state securities laws <strong>and</strong> otherwise in<br />
<strong>com</strong>pliance with all applicable laws in the jurisdiction in which the New Shares are <strong>of</strong>fered <strong>and</strong> sold; <strong>and</strong><br />
... the Applicant is not otherwise prohibited by the laws <strong>of</strong> their foreign jurisdiction from acquiring New Shares pursuant to the<br />
Entitlement Offer.<br />
<strong>WorleyParsons</strong> <strong>and</strong> the Lead Manager reserve the right to <strong>of</strong>fer New Shares under the Institutional Entitlement Offer to any<br />
Qualifying Institutional Investor outside Australia, where to do so would not be in breach <strong>of</strong> the securities law requirements <strong>of</strong><br />
the relevant jurisdiction.<br />
No person is authorised to give any information or make any representations other than those contained in this Document <strong>and</strong>,<br />
if given or made, such information or representations will not be relied upon as having been authorised by <strong>WorleyParsons</strong>, the<br />
Underwriter <strong>and</strong> Lead Manager or any other person, nor will any such persons have any liability or responsibility.<br />
9.14 Interests <strong>of</strong> Directors<br />
The relevant interests held by Directors before the Entitlement Offer <strong>and</strong> the New Shares subscribed for by the Directors under<br />
the Institutional Entitlement Offer are detailed below:<br />
Total New Shares<br />
subscribed for<br />
under the<br />
Total Shares eligible Total Institutional<br />
Director for Entitlement Offer performance rights 1 Entitlement Offer<br />
John Grill 32,581,181 294,708 357,897<br />
John Green 890,975 50,000<br />
Grahame Campbell 453,638 48,639<br />
Ron McNeilly 340,550 35,309<br />
David Housego 141,823 126,668 15,759<br />
Erich Fraunschiel 147,863 14,508<br />
William Hall 68,524 75,788 7,614<br />
Eric Gwee Teck Hai 2,555 –<br />
34,627,109 497,164 529,727<br />
Notes:<br />
1 The performance rights are not eligible to participate in the Entitlement Offer. The totals shown include the following performance rights which may or may not<br />
be accepted by 2 March 2007:<br />
Grill 52,500<br />
Housego 21,500<br />
Hall 28,000<br />
102,000<br />
Larry Benke, a proposed alternate Director, is one <strong>of</strong> the Vendors with a 6.23% interest in Colt, <strong>and</strong> as such will receive 6.23%<br />
<strong>of</strong> the Purchase Price. He has elected to receive 50% <strong>of</strong> that amount in Exchangeable Shares at the Institutional Bookbuild<br />
Price. See Sections 9.1, 9.3 <strong>and</strong> 9.5 for further details <strong>of</strong> the Acquisition, the Purchase Price <strong>and</strong> the Exchangeable Shares <strong>and</strong><br />
related arrangements. He has agreed to enter into an employment agreement with <strong>WorleyParsons</strong>, <strong>and</strong> will be eligible to<br />
participate in <strong>WorleyParsons</strong>’ short-term <strong>and</strong> long-term incentive plans as outlined in Section 3.3.<br />
Other than as set out in this Document:<br />
... no Director, or proposed Director holds at the date <strong>of</strong> this Document, or has held in the two years before lodgement <strong>of</strong> this<br />
Document with ASIC, an interest in:<br />
– the formation or promotion <strong>of</strong> <strong>WorleyParsons</strong>;<br />
– property acquired or proposed to be acquired by <strong>WorleyParsons</strong> in connection with its formation or promotion or the<br />
Entitlement Offer; or<br />
– the Entitlement Offer;<br />
... no Director has any interest in the Resolutions; <strong>and</strong><br />
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Section 9 Additional information continued<br />
... no one has paid or agreed to pay any amount, or given or agreed to give any benefit, whether in cash or shares or otherwise,<br />
to any Director or proposed Director, either to induce them to be<strong>com</strong>e, or qualify them as, a Director or in connection with<br />
services provided by them in connection with the formation or promotion <strong>of</strong> <strong>WorleyParsons</strong> or in connection with the<br />
Entitlement Offer.<br />
9.15 Interests <strong>of</strong> experts <strong>and</strong> advisors<br />
UBS has acted as Underwriter <strong>and</strong> Lead Manager for the Offer <strong>and</strong> Financial Advisor to <strong>WorleyParsons</strong>. UBS is entitled to<br />
receive the fees <strong>and</strong> <strong>com</strong>missions described in the summary <strong>of</strong> the Underwriting Agreement in addition to a Financial Advisor’s<br />
fee <strong>of</strong> $3.9 million.<br />
Ernst & Young is <strong>WorleyParsons</strong>’ auditor <strong>and</strong> has prepared the Independent Accountant’s report on historical financial <strong>and</strong><br />
pro forma financial information. Ernst & Young has also performed due diligence enquiries in relation to historical financial<br />
information. <strong>WorleyParsons</strong> has agreed to pay $1.2 million for such services to the date <strong>of</strong> this Document. Further amounts<br />
may be paid to Ernst & Young in accordance with its usual time-based charge-out rates.<br />
PricewaterhouseCoopers (PwC) has acted as taxation advisor to <strong>WorleyParsons</strong> in relation to the taxation aspects <strong>of</strong> the<br />
Entitlement Offer. <strong>WorleyParsons</strong> has agreed to pay $13,000 for such services to the date <strong>of</strong> this Document. Further amounts<br />
may be paid to PwC in accordance with its usual time-based charge-out rates.<br />
Freehills has acted as Australian legal advisor to <strong>WorleyParsons</strong> in connection with the Entitlement Offer <strong>and</strong> has performed<br />
work in relation to the Australian due diligence enquiries on legal matters. <strong>WorleyParsons</strong> has agreed to pay $0.8 million for<br />
legal services to the date <strong>of</strong> this Document. Further amounts may be paid to Freehills in accordance with its usual time-based<br />
charge-out rates.<br />
KPMG has been engaged by <strong>WorleyParsons</strong> for the purposes <strong>of</strong> a limited review <strong>of</strong> the audited financial statements <strong>of</strong> Colt<br />
contained in this Document, in accordance with section 7110 <strong>of</strong> the Canadian Institute <strong>of</strong> Chartered Accountants H<strong>and</strong>book.<br />
<strong>WorleyParsons</strong> has agreed to pay C$40,000 for such services to the date <strong>of</strong> this Document.<br />
Other than as set out in this Document:<br />
... no person named in this Document as performing a function in a pr<strong>of</strong>essional, advisory or other capacity in connection with<br />
the preparation or distribution <strong>of</strong> this Document; <strong>and</strong><br />
... no promoter or underwriter <strong>of</strong> the Entitlement Offer or financial services licensee named in this Document as a financial<br />
services licensee involved in the Entitlement Offer,<br />
holds, at the date <strong>of</strong> this Document, or has held in the two years before that date, an interest in:<br />
... the formation or promotion <strong>of</strong> <strong>WorleyParsons</strong>;<br />
... property acquired or proposed to be acquired by <strong>WorleyParsons</strong> in connection with the formation or promotion <strong>of</strong><br />
<strong>WorleyParsons</strong> or with the Entitlement Offer; or<br />
... the Entitlement Offer,<br />
nor has anyone paid or agreed to pay any amount, or given or agreed to give any benefit, whether in cash or shares or<br />
otherwise, to such persons in connection with services provided by them in connection with the formation or promotion <strong>of</strong><br />
<strong>WorleyParsons</strong> or with the Entitlement Offer.<br />
9.16 Consents<br />
Each <strong>of</strong> the parties named below:<br />
... has given <strong>and</strong> has not, before the lodgement <strong>of</strong> this Document with ASIC, withdrawn its consent to be named in this<br />
Document in the form <strong>and</strong> context in which it is named;<br />
... does not make, or purport to make, any statement that is included in this Document or any statement on which a statement<br />
made in this Document is based, other than as specified below; <strong>and</strong><br />
... to the maximum extent permitted by law, expressly disclaims <strong>and</strong> takes no responsibility for any statements in or omissions<br />
from this Document, other than the reference to its name in the form <strong>and</strong> context in which it is named <strong>and</strong> a statement or<br />
report included in this Document with its consent as specified below:<br />
The Independent Accountant has also given, <strong>and</strong> has not, before the lodgement <strong>of</strong> this Document with ASIC, withdrawn its<br />
consent to the inclusion <strong>of</strong> its Independent Accountant’s report in the form <strong>and</strong> context in which it is included in this Document.<br />
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Role Consenting Party Consent<br />
Financial Advisor, Underwriter <strong>and</strong> UBS AG, Australia Branch Consent to be named<br />
Lead Manager<br />
Australian legal advisor Freehills Consent to be named<br />
Canadian auditor <strong>of</strong> Colt KPMG, Canada Consent to be named<br />
Independent Accountant Ernst & Young Consent to the inclusion <strong>of</strong> statements attributed to it in, <strong>and</strong><br />
relating to, the Independent Accountant’s report<br />
Taxation advisor PricewaterhouseCoopers Consent to be named<br />
Share Registry Computershare Investor Services Consent to be named<br />
Pty Limited<br />
9.17 Privacy<br />
If you apply for New Shares, you will provide personal information to <strong>WorleyParsons</strong> <strong>and</strong> the Share Registry. <strong>WorleyParsons</strong> <strong>and</strong><br />
the Share Registry will collect, hold <strong>and</strong> use your personal information in order to assess your Application, service your needs as<br />
an investor, provide facilities <strong>and</strong> services that you request <strong>and</strong> carry out appropriate administration.<br />
Tax <strong>and</strong> <strong>com</strong>pany law requires some <strong>of</strong> the information to be collected in connection with your Application. If you do not<br />
provide the information requested, your Application may not be able to be processed efficiently, or at all.<br />
<strong>WorleyParsons</strong> is <strong>com</strong>mitted to respecting the privacy <strong>of</strong> your personal information. <strong>WorleyParsons</strong> <strong>and</strong> the Share Registry may<br />
disclose your personal information for purposes related to your investment to their agents <strong>and</strong> service providers, including<br />
those listed below or as otherwise authorised under the Privacy Act 1988 (Cth):<br />
... Underwriter <strong>and</strong> Lead Manager in order to assess your Application;<br />
... Share Registry for ongoing administration <strong>of</strong> the Share register; <strong>and</strong><br />
... printers <strong>and</strong> the mailing house for the purposes <strong>of</strong> preparation <strong>and</strong> distribution <strong>of</strong> statements <strong>and</strong> for h<strong>and</strong>ling <strong>of</strong> mail.<br />
The information may also be disclosed to members <strong>of</strong> the Group <strong>and</strong> to their agents <strong>and</strong> services providers on the basis that<br />
they deal with such information in accordance with <strong>WorleyParsons</strong>’ privacy policy.<br />
Your personal information may also be provided to certain third parties. The types <strong>of</strong> third parties that may be provided with<br />
your personal information, <strong>and</strong> the circumstances in which your personal information may be disclosed, are:<br />
... your financial advisor or broker (other than your tax file number information) in connection with services provided to you by<br />
your advisor or broker;<br />
... government, regulatory authorities or other people when permitted or required by law, such as ASIC or people inspecting the<br />
Share register in accordance with the Corporations Act;<br />
... ASX when <strong>and</strong> to the extent required by law or the Listing Rules; <strong>and</strong><br />
... in certain circumstances <strong>and</strong> with safeguards to respect your privacy, potential or actual purchasers <strong>of</strong> an interest in<br />
<strong>WorleyParsons</strong> or <strong>WorleyParsons</strong>’ business or any part there<strong>of</strong>.<br />
Under the Privacy Act 1988 (Cth), you may request access to your personal information held by (or on behalf <strong>of</strong>) <strong>WorleyParsons</strong><br />
or the Share Registry. You can request access to your personal information by writing or telephoning to <strong>WorleyParsons</strong> through<br />
the Share Registry as follows:<br />
Computershare Investor Services Pty Limited<br />
Level 2<br />
60 Carrington Street<br />
Sydney NSW 2000<br />
Australia<br />
Telephone: 1300 855 080.<br />
You can obtain a copy <strong>of</strong> <strong>WorleyParsons</strong>’ privacy policy electronically at www.worleyparsons.<strong>com</strong>.<br />
9.18 Expenses <strong>of</strong> the Entitlement Offer<br />
The expenses <strong>of</strong> the Entitlement Offer are expected to be approximately $22 million. These expenses will be paid by<br />
<strong>WorleyParsons</strong>.<br />
9.19 ASIC modifications, exemptions <strong>and</strong> class order relief<br />
<strong>WorleyParsons</strong> has applied to ASIC for a modification <strong>of</strong> section 707(3) <strong>of</strong> the Corporations Act to enable the on-sale <strong>of</strong><br />
Ordinary Shares issued on exchange <strong>of</strong> the Exchangeable Shares.<br />
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Section 9 Additional information continued<br />
9.20 ASX waivers <strong>and</strong> confirmation<br />
<strong>WorleyParsons</strong> has applied to ASX for confirmation in respect <strong>of</strong>, <strong>and</strong> waivers from, certain Listing Rules in respect <strong>of</strong> the<br />
Entitlement Offer <strong>and</strong> the Acquisition. <strong>WorleyParsons</strong> has received the confirmations <strong>and</strong> waivers listed below:<br />
... confirmation that the terms <strong>of</strong> the Special Voting Share <strong>and</strong> the Exchangeable Shares are appropriate <strong>and</strong> equitable for the<br />
purposes <strong>of</strong> Listing Rule 6.1 <strong>and</strong> that the Exchangeable Shares <strong>and</strong> the Special Voting Share are acceptable as an additional<br />
class <strong>of</strong> ordinary securities for the purposes <strong>of</strong> Listing Rule 6.2;<br />
... confirmation that Listing Rule 11.1 does not apply to the transaction <strong>and</strong> Shareholder approval is not required;<br />
... confirmation that the Exchangeable Shares (<strong>and</strong> associated exchange rights <strong>and</strong> obligations) will be treated for Listing Rule<br />
purposes (including for the purposes <strong>of</strong> Listing Rules 7.1 <strong>and</strong> 10.11) on the basis that:<br />
(a) the Exchangeable Shares are deemed to have been converted into Ordinary Shares at the time <strong>of</strong> their issue; <strong>and</strong><br />
(b) the issue <strong>of</strong> Ordinary Shares upon the exchange <strong>of</strong> Exchangeable Shares in accordance with their terms will not require<br />
any further shareholder approval;<br />
... confirmation that each voting right associated with the Special Voting Share <strong>and</strong> each Exchangeable Share (<strong>and</strong> its<br />
associated exchange rights <strong>and</strong> obligations) will together count as one ordinary share for the purposes <strong>of</strong> Listing Rule 7.1;<br />
<strong>and</strong><br />
... confirmation that Listing Rule 10.1 will not prevent exchange <strong>of</strong> the Exchangeable Shares in accordance with their terms or<br />
any disposal or acquisition <strong>of</strong> a substantial asset to or from CanCo to effect such an exchange or otherwise to permit the<br />
Group to <strong>com</strong>ply with the terms <strong>of</strong> the Exchangeable Shares.<br />
In order to conduct the Entitlement Offer, <strong>WorleyParsons</strong> has received, from ASX, waivers <strong>of</strong> Listing Rules 7.1 <strong>and</strong> 10.11<br />
to permit:<br />
... <strong>WorleyParsons</strong> to make the Entitlement Offer in the manner described in this Document without the requirement to obtain<br />
Shareholder approval; <strong>and</strong><br />
... related parties <strong>of</strong> <strong>WorleyParsons</strong> to participate in the Entitlement Offer up to the extent <strong>of</strong> their Entitlement on the same<br />
terms as the other Shareholders without the need to obtain Shareholder approval.<br />
The Listing Rule 7.1 waiver is subject to certain conditions.<br />
The Listing Rule 10.11 waiver is subject to the same conditions imposed in relation to the waiver from Listing Rule 7.1.<br />
These waivers also set out the arrangements for dealing with holdings registered in the names <strong>of</strong> nominees. In particular, a<br />
nominee Shareholder is treated as a separate holder in respect <strong>of</strong> Shares held for each <strong>of</strong> one or more Qualifying Shareholders<br />
(<strong>and</strong>, accordingly, may receive <strong>of</strong>fers under the Institutional Entitlement Offer in respect <strong>of</strong> Shares held as nominee for<br />
Qualifying Institutional Shareholders <strong>and</strong> <strong>of</strong>fers under the Retail Entitlement Offer in respect <strong>of</strong> Shares held as nominee for<br />
other persons). Offers under the Institutional Entitlement Offer will be treated as being made to the nominee, <strong>and</strong> therefore to<br />
a Qualifying Institutional Shareholder, even where made directly to the Qualifying Institutional Shareholder for whom the<br />
nominee holds.<br />
These waivers also allow <strong>WorleyParsons</strong> to ignore, for the purposes <strong>of</strong> determining those entitled to receive Entitlements<br />
(both under the Institutional Entitlement Offer <strong>and</strong> the Retail Entitlement Offer) transactions which occurred after the close<br />
<strong>of</strong> trading on ASX on 7 February 2007 (other than registration <strong>of</strong> transactions which were effected through the Integrated<br />
Trading System before the announcement) (post ex date transactions). Therefore, if you have acquired Shares in a post ex date<br />
transaction, you may not be entitled to receive an Entitlement in respect <strong>of</strong> those Shares.<br />
ASX has also granted waivers <strong>of</strong> Listing Rules 3.20 <strong>and</strong> 7.40 to the extent necessary to permit <strong>WorleyParsons</strong> to conduct the<br />
Entitlement Offer in accordance with a timetable different to that prescribed in the Listing Rules.<br />
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9.21 Regulatory approvals<br />
9.21.1 Canadian Commissioner <strong>of</strong> Competition<br />
The acquisition <strong>of</strong> Colt requires pre-merger notification to the Canadian Commissioner <strong>of</strong> Competition (the Commissioner) as<br />
<strong>WorleyParsons</strong>’ acquisition <strong>of</strong> Colt exceeds certain specified financial thresholds.<br />
<strong>WorleyParsons</strong> does not believe that any action, other than a pre-merger notification filing, <strong>and</strong>/or a request for an advance<br />
ruling certificate (ARC) stating that the Commissioner will not challenge the Acquisition, will be required in connection with the<br />
Acquisition under the Competition Act (Canada), or that the Canadian Competition Tribunal would have grounds to issue an<br />
order either that the merger not proceed or if it has proceeded, be dissolved or that certain assets or shares involved be<br />
disposed. However, as in every transaction, there can be no assurance that a challenge to the Acquisition on <strong>com</strong>petition law<br />
grounds will not be made or, if such challenge is made, that it would not be successful.<br />
<strong>WorleyParsons</strong> <strong>and</strong> Colt will submit a short form pre-merger notification to the Commissioner, <strong>and</strong> a request for an ARC.<br />
<strong>WorleyParsons</strong> does not currently intend to <strong>com</strong>plete the Acquisition unless all applicable waiting periods associated with the<br />
pre-merger notification under the Competition Act (Canada) have expired or been waived <strong>and</strong> the Commissioner shall have<br />
issued an ARC, or the Commissioner has confirmed that no action will be taken in respect <strong>of</strong> the Acquisition.<br />
9.21.2 Exemptive relief from Applicable Canadian Securities Commissions in relation to holders <strong>of</strong> Ordinary<br />
Shares resident in the Applicable Canadian Jurisdictions<br />
<strong>WorleyParsons</strong> <strong>and</strong> Colt have jointly applied to the securities <strong>com</strong>missions (Applicable Canadian Securities Commissions) in<br />
the Provinces <strong>of</strong> Alberta, British Columbia <strong>and</strong> Ontario (Applicable Canadian Jurisdictions) for discretionary relief from certain<br />
technical resale restrictions that may otherwise apply to the resale <strong>of</strong> Ordinary Shares by holders <strong>of</strong> Ordinary Shares resident in<br />
the Applicable Canadian Jurisdictions (Canadian Exemptive Relief Order). The relief being sought from the Applicable Canadian<br />
Securities Commissions will provide that the prospectus requirement under applicable Canadian securities laws will not apply<br />
to the first trade <strong>of</strong> Ordinary Shares originally distributed in the Applicable Canadian Jurisdictions pursuant to a prospectus<br />
exemption if:<br />
... <strong>WorleyParsons</strong> is not a reporting issuer in any jurisdiction <strong>of</strong> Canada on the date <strong>of</strong> the trade; <strong>and</strong><br />
... the trade is made through ASX or through another exchange or market outside <strong>of</strong> Canada or to a person or <strong>com</strong>pany outside<br />
<strong>of</strong> Canada.<br />
The Ordinary Shares issuable to the Vendors upon the exchange <strong>of</strong> the Exchangeable Shares will be issued to the Vendors<br />
pursuant to an exemption from the prospectus requirement under applicable Canadian securities laws.<br />
In addition, the Ordinary Shares that will be issued pursuant to the Caravel Offer will be issued pursuant to an exemption from<br />
the prospectus requirement under applicable Canadian securities laws. Provided that the Canadian Exemptive Relief Order<br />
is obtained <strong>and</strong> all conditions therein are satisfied (see above), the Ordinary Shares issued on exchange <strong>of</strong> any <strong>of</strong> the<br />
Exchangeable Shares or pursuant to the Caravel Offer will be freely tradeable from the jurisdictions in which the holders reside<br />
at Completion.<br />
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Section 9 Additional information continued<br />
9.22 Governing law<br />
This Document <strong>and</strong> the contracts that arise from acceptance <strong>of</strong> the Applications are governed by the laws applicable in<br />
New South Wales <strong>and</strong> each Applicant submits to the exclusive jurisdiction <strong>of</strong> the courts <strong>of</strong> New South Wales.<br />
9.23 Consent to lodgement<br />
Each <strong>of</strong> the Directors <strong>of</strong> <strong>WorleyParsons</strong> (<strong>and</strong> Larry Benke as a proposed alternate Director) has consented to the lodgement <strong>of</strong><br />
this Document.<br />
9.24 Expiry<br />
No New Shares will be <strong>of</strong>fered on the basis <strong>of</strong> this Document after the Expiry Date.<br />
Signed for <strong>and</strong> on behalf <strong>of</strong> <strong>WorleyParsons</strong> by:<br />
John Grill <strong>and</strong> David Housego being the Directors authorised to sign this Document pursuant to a resolution passed at a<br />
meeting <strong>of</strong> the Directors.<br />
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Section 10<br />
<strong>Notice</strong> <strong>of</strong><br />
<strong>Meeting</strong><br />
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Section 10 <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong><br />
<strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong><br />
<strong>Notice</strong> is given that a meeting <strong>of</strong> shareholders <strong>of</strong> <strong>WorleyParsons</strong> will be held at the following time <strong>and</strong> place:<br />
Time: 2.00pm (AEST)<br />
Date: Monday 2 April 2007<br />
Place: Radisson Plaza Hotel Sydney<br />
27 O’Connell Street<br />
Sydney NSW.<br />
Capitalised terms used in the <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong> are defined in the Glossary <strong>of</strong> Terms.<br />
BUSINESS OF THE MEETING<br />
The business <strong>of</strong> the <strong>Meeting</strong> is as follows:<br />
Resolution 1<br />
Approval <strong>of</strong> the variation to class rights through the issue <strong>of</strong> the Special Voting Share<br />
To consider <strong>and</strong>, if thought fit, to pass the following resolution as a special resolution:<br />
“That, subject to the <strong>com</strong>pletion <strong>of</strong> the Acquisition in accordance with the Master Transaction Agreement, pursuant to <strong>and</strong> in<br />
accordance with the Company’s constitution, approval be given to the issue by <strong>WorleyParsons</strong> <strong>of</strong> the Special Voting Share,<br />
having the rights <strong>and</strong> restrictions contained in the Appendix to the Document <strong>of</strong> which this <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong> forms part, as a<br />
new class <strong>of</strong> share in the capital <strong>of</strong> the Company.”<br />
Resolution 2<br />
Approval <strong>of</strong> the issue <strong>of</strong> Exchangeable Shares (<strong>and</strong> associated arrangements) <strong>and</strong> the issue <strong>of</strong> Ordinary Shares under<br />
the Caravel Offer<br />
To consider <strong>and</strong>, if thought fit, to pass the following resolution as an ordinary resolution:<br />
“That, subject to the <strong>com</strong>pletion <strong>of</strong> the Acquisition in accordance with the Master Transaction Agreement, the issue <strong>of</strong><br />
(i) Exchangeable Shares <strong>and</strong> associated arrangements under which <strong>WorleyParsons</strong> has rights <strong>and</strong> obligations to exchange them<br />
for Ordinary Shares <strong>and</strong> (ii) Ordinary Shares pursuant to the Caravel Offer, be approved <strong>and</strong> ratified for all purposes (including for<br />
the purpose <strong>of</strong> Listing Rule 7.4 or, in respect <strong>of</strong> any securities referred to in this Resolution that have not been issued prior to<br />
the <strong>Meeting</strong>, Listing Rule 7.1).”<br />
Voting exclusion statement:<br />
<strong>WorleyParsons</strong> will disregard any votes cast on Resolution 2 by a person who participated in the issue, may participate in the<br />
issue <strong>and</strong> any person who might obtain a benefit, except a benefit solely in the capacity <strong>of</strong> an ordinary security holder, in the<br />
issue, if the Resolution is passed, <strong>and</strong> any associate <strong>of</strong> those persons.<br />
However, <strong>WorleyParsons</strong> need not disregard a vote if:<br />
(i) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or<br />
(ii) it is cast by the person chairing the <strong>Meeting</strong> as proxy for a person who is entitled to vote, in accordance with a direction on<br />
the Proxy Form to vote as the proxy decides.<br />
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EXPLANATORY NOTES ON THE RESOLUTIONS<br />
Resolution 1<br />
Approval <strong>of</strong> the variation to class rights through the issue <strong>of</strong> the Special Voting Share<br />
Shareholder approval is being sought in accordance with the requirements <strong>of</strong> sections 246B(1) <strong>and</strong> 246C(5) <strong>of</strong> the<br />
Corporations Act.<br />
Section 246B(1) provides that rights attaching to a class <strong>of</strong> shares may only be varied in accordance with the procedure set<br />
out in the <strong>com</strong>pany’s constitution for varying such rights.<br />
<strong>WorleyParsons</strong> currently has one class <strong>of</strong> share on issue, being the Ordinary Shares. Pursuant to Resolution 1, <strong>WorleyParsons</strong><br />
is proposing to issue the Special Voting Share. Section 246C(5) provides that if a <strong>com</strong>pany with one class <strong>of</strong> share issues any<br />
new shares, the issue is taken to vary the rights attached to shares already issued if the rights attaching to the new class <strong>of</strong><br />
shares are not the same as the rights attached to the shares already issued unless those rights are provided for in the<br />
<strong>com</strong>pany’s constitution (or a notice, document or resolution that is lodged with ASIC). The terms <strong>of</strong> the Special Voting Share are<br />
different to the terms <strong>of</strong> the Ordinary Shares <strong>and</strong> are not set out in the Constitution (or any other notice, document or<br />
resolution lodged with ASIC) <strong>and</strong> therefore the issue would constitute a variation <strong>of</strong> the rights <strong>of</strong> Shareholders.<br />
Rule 2.4 <strong>of</strong> the Constitution provides that the rights attached to any class <strong>of</strong> shares may, unless their terms <strong>of</strong> issue state<br />
otherwise, be varied with the sanction <strong>of</strong> a special resolution passed at a separate meeting <strong>of</strong> the holders <strong>of</strong> shares <strong>of</strong> the<br />
class (in this case, all Shareholders).<br />
The Directors are seeking the approval <strong>of</strong> Shareholders to the issue by <strong>WorleyParsons</strong> <strong>of</strong> the Special Voting Share having the<br />
rights <strong>and</strong> restrictions contained in Appendix A to this Document, as a new class <strong>of</strong> share in the capital <strong>of</strong> the Company.<br />
The purpose <strong>of</strong> issuing the Special Voting Share, in addition to the issue <strong>of</strong> Exchangeable Shares to the Vendors, is to provide<br />
the Vendors with the same economic interest <strong>and</strong> voting rights in <strong>WorleyParsons</strong> as if they held Ordinary Shares. The Directors<br />
have <strong>com</strong>mitted to seeking Shareholder approval for the issue <strong>of</strong> the Special Voting Share as part <strong>of</strong> the agreement negotiated<br />
between <strong>WorleyParsons</strong> <strong>and</strong> the Vendors. Further details <strong>of</strong> the Acquisition, including its benefits <strong>and</strong> risks, <strong>and</strong> the issue <strong>of</strong><br />
the Special Voting Share are contained in Sections 5, 8 <strong>and</strong> 9.1 <strong>of</strong> this Document.<br />
The terms <strong>of</strong> the Special Voting Share are set out in full in Appendix A to this Document. As noted above, the issue <strong>of</strong> the<br />
Special Voting Share (in conjunction with the Exchangeable Shares) is intended to replicate an issue <strong>of</strong> Ordinary Shares to the<br />
Vendors as consideration for the Acquisition.<br />
Subject to satisfaction <strong>of</strong> certain conditions precedent to the Acquisition (which are summarised in Section 9.3 <strong>of</strong> this<br />
Document), the Acquisition will still proceed whether or not the Resolutions are approved by Shareholders <strong>and</strong> it is anticipated<br />
that the Acquisition will have been <strong>com</strong>pleted before the date <strong>of</strong> the <strong>Meeting</strong>. However, the Special Voting Share will not be<br />
issued unless <strong>and</strong> until Resolution 1 is passed by Shareholders.<br />
The Directors unanimously re<strong>com</strong>mend that Shareholders vote in favour <strong>of</strong> Resolution 1. As noted on page 16 <strong>of</strong> this<br />
Document, the Directors <strong>and</strong> certain senior managers <strong>of</strong> <strong>WorleyParsons</strong> who are Shareholders have confirmed their intention to<br />
vote all <strong>and</strong> any Ordinary Shares they control in favour <strong>of</strong> Resolution 1.<br />
Resolution 2<br />
Approval <strong>of</strong> the issue <strong>of</strong> Exchangeable Shares (<strong>and</strong> associated arrangements) <strong>and</strong> Ordinary Shares under the<br />
Caravel Offer<br />
Listing Rule 7.1 provides that without shareholder approval, a <strong>com</strong>pany must not issue or agree to issue new “equity securities”<br />
constituting more than 15% <strong>of</strong> its total ordinary shares on issue within a 12 month period, excluding any issue <strong>of</strong> shares<br />
approved by shareholders. The Exchangeable Shares are exchangeable into Ordinary Shares <strong>and</strong> so are “equity securities” for<br />
the purposes <strong>of</strong> the Listing Rules.<br />
The Exchangeable Shares (each <strong>of</strong> which is exchangeable into an Ordinary Share) are to be issued by CanCo to the Vendors<br />
(further details <strong>of</strong> which are set out in Section 9.1 <strong>of</strong> this Document). <strong>WorleyParsons</strong> has rights <strong>and</strong> obligations, under the<br />
terms <strong>of</strong> the Exchange Rights Agreement, to issue Ordinary Shares on exchange <strong>of</strong> the Exchangeable Shares. The Directors are<br />
therefore seeking Shareholder approval for the issue <strong>of</strong> the Exchangeable Shares <strong>and</strong> associated arrangements under which<br />
<strong>WorleyParsons</strong> has rights <strong>and</strong> obligations to issue Ordinary Shares in exchange. This is to ensure that <strong>WorleyParsons</strong>’ capacity<br />
to raise further capital is not reduced.<br />
In addition, <strong>WorleyParsons</strong> will <strong>of</strong>fer the Caravel Shareholders up to $10 million worth <strong>of</strong> New Shares at the Institutional<br />
Bookbuild Price. Further details <strong>of</strong> the <strong>of</strong>fer are contained in Section 1.13 <strong>of</strong> this Document. The Directors are also seeking<br />
Shareholder approval for this issue <strong>of</strong> New Shares to ensure <strong>WorleyParsons</strong>’ capacity to raise further capital is not reduced.<br />
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Section 10 <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong> continued<br />
If all <strong>of</strong> the conditions precedent to <strong>com</strong>pletion <strong>of</strong> the Acquisition are satisfied or waived before the date <strong>of</strong> the <strong>Meeting</strong>,<br />
the Exchangeable Shares (<strong>and</strong> associated arrangements) <strong>and</strong> Ordinary Shares (under the Caravel Offer) will have been issued<br />
without Shareholder approval <strong>and</strong> so will “count” towards <strong>WorleyParsons</strong>’ capacity to issue more equity securities. However,<br />
Listing Rule 7.4 allows an issue <strong>of</strong> securities made without the approval <strong>of</strong> shareholders to be treated as having been made<br />
with approval for the purposes <strong>of</strong> Listing Rule 7.1 provided the issue did not breach Listing Rule 7.1 <strong>and</strong> shareholders<br />
subsequently approve the issue.<br />
If all the conditions precedent have not been satisfied or waived before the date <strong>of</strong> the <strong>Meeting</strong>, the Exchangeable Shares (<strong>and</strong><br />
associated arrangements) <strong>and</strong> Ordinary Shares (under the Caravel Offer) will not have been issued. In that case, the approval<br />
will be for the purposes <strong>of</strong> Listing Rule 7.1.<br />
The following information is provided pursuant to the Listing Rules:<br />
Number <strong>of</strong><br />
Allotment <strong>and</strong> securities issued Use or intended use<br />
Issue date or to be issued Issue price Terms <strong>of</strong> securities Allottees <strong>of</strong> funds raised<br />
Anticipated to be 12,226,444 The Exchangeable Shares The Vendors (in Partial funding <strong>of</strong> the<br />
the Completion Date Institutional (see Section 9.1 <strong>of</strong> respect <strong>of</strong> the Acquisition<br />
or within three Bookbuild this Document for Exchangeable<br />
months <strong>of</strong> the date Price ($28.00) details <strong>of</strong> the terms Shares); <strong>and</strong> CanCo<br />
<strong>of</strong> the <strong>Meeting</strong> <strong>of</strong> the Exchangeable (in respect <strong>of</strong> the<br />
Shares) <strong>and</strong><br />
rights <strong>and</strong> obligations<br />
associated rights <strong>and</strong> under the Exchange<br />
obligations to issue Rights Agreement)<br />
Ordinary Shares (see<br />
Section 9.1 for<br />
further details <strong>of</strong> those<br />
rights <strong>and</strong> obligations)<br />
Anticipated to be Up to 357,143 The Same terms as, <strong>and</strong> rank Caravel Partial funding <strong>of</strong> the<br />
five Business Days Institutional equally with, Ordinary Shareholders Acquisition<br />
after the Completion Bookbuild Shares<br />
Date or within three Price ($28.00)<br />
months <strong>of</strong> the date<br />
<strong>of</strong> the <strong>Meeting</strong><br />
The Directors believe that it is in the best interests <strong>of</strong> <strong>WorleyParsons</strong> that its issue <strong>of</strong> the Exchangeable Shares <strong>and</strong> Ordinary<br />
Shares under the Caravel Offer be approved <strong>and</strong> that <strong>WorleyParsons</strong> retains its ability to issue up to a full 15% <strong>of</strong> its issued<br />
capital within a 12 month period, so that it may take <strong>com</strong>mercial opportunities that may arise in the course <strong>of</strong> its activities, as<br />
<strong>and</strong> when those opportunities arise.<br />
The Directors unanimously re<strong>com</strong>mend that Shareholders vote in favour <strong>of</strong> Resolution 2.<br />
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VOTING AND ELIGIBILITY<br />
The Resolutions will be decided by way <strong>of</strong> a poll. Each Shareholder present in person or by proxy (who need not be a<br />
Shareholder) has one vote for each Share held. On a poll, a Shareholder entitled to two or more votes need not cast all their<br />
votes <strong>and</strong> may cast their votes in different ways.<br />
Resolution 1<br />
Special majority required<br />
Resolution 1 is a special resolution <strong>and</strong> will be passed if at least 75% <strong>of</strong> votes cast by Shareholders present at the <strong>Meeting</strong> in<br />
person, or by proxy or by corporate representative <strong>and</strong> entitled to vote on the resolution, are cast in favour <strong>of</strong> the resolution.<br />
Resolution 2<br />
Ordinary majority required<br />
Resolution 2 is an ordinary resolution <strong>and</strong> will be passed if more than 50% <strong>of</strong> votes cast by Shareholders present at the<br />
meeting in person, or by proxy or by corporate representative <strong>and</strong> entitled to vote on the resolution, are cast in favour <strong>of</strong> the<br />
resolution.<br />
Eligibility to vote<br />
All holders <strong>of</strong> Shares appearing in <strong>WorleyParsons</strong>’ register <strong>of</strong> Shareholders at 2.00pm (AEST) on Saturday 31 March 2007 will<br />
be entitled to attend <strong>and</strong> vote at the <strong>Meeting</strong>.<br />
Quorum<br />
The quorum necessary to be present for a meeting <strong>of</strong> Shareholders is at least two Shareholders.<br />
HOW TO EXERCISE A RIGHT TO VOTE<br />
Jointly held Shares<br />
If Shares are jointly held, a joint holder may vote at any meeting in person or by proxy, attorney or representative as if that<br />
person was the sole holder. If more than one joint Shareholder votes, the vote <strong>of</strong> the Shareholder whose name appears first in<br />
the register will be counted to the exclusion <strong>of</strong> the other or others.<br />
Corporations<br />
In order to vote at the <strong>Meeting</strong> (other than by proxy), a corporation that is a Shareholder must appoint a person to act as its<br />
representative. The appointment must <strong>com</strong>ply with section 250D <strong>of</strong> the Corporations Act. The corporate representative must<br />
bring to the <strong>Meeting</strong> evidence <strong>of</strong> his or her appointment including any authority under which it is signed.<br />
Voting by proxy<br />
If you do not plan to attend the <strong>Meeting</strong> in person, you are encouraged to <strong>com</strong>plete <strong>and</strong> return the Proxy Form that<br />
ac<strong>com</strong>panies this Document.<br />
... A Shareholder entitled to attend <strong>and</strong> cast two or more votes at the <strong>Meeting</strong> is entitled to appoint not more than two proxies.<br />
... Where more than one proxy is appointed, each proxy may be appointed to represent a specified proportion (or number) <strong>of</strong> the<br />
Shareholder’s votes. If a Shareholder does not specify the proportion or number <strong>of</strong> the Shareholder’s votes each proxy may<br />
exercise, each proxy may exercise half the votes. If you wish to appoint a second proxy, please contact the Share Registry for<br />
the relevant form.<br />
... A proxy may, but need not, be a Shareholder.<br />
... You may appoint the Chairman <strong>of</strong> the <strong>Meeting</strong> as your proxy to vote as you direct. If you return the Proxy Form without<br />
naming a proxy, the Chairman <strong>of</strong> the <strong>Meeting</strong> will be appointed as your proxy. If the Chairman is your proxy but you do not<br />
direct the Chairman how to vote, the Chairman will vote in favour <strong>of</strong> the Resolutions.<br />
The <strong>com</strong>pleted Proxy Form <strong>and</strong> the power <strong>of</strong> attorney or other authority (if any) under which the Proxy Form is signed (or a<br />
certified copy <strong>of</strong> it) must be received no later than 2.00pm (AEST) on Saturday 31 March 2007.<br />
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Section 10 <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong> continued<br />
Mail, deliver or fax your <strong>com</strong>pleted Proxy Form to the Share Registry as follows:<br />
Mail or deliver to:<br />
Computershare Investor Services Pty Limited<br />
Level 3<br />
60 Carrington Street<br />
Sydney NSW 2000<br />
Fax to:<br />
61 2 8235 8220.<br />
In order to ensure that the Share Registry receives mailed Proxy Forms before this time, please ensure that Proxy Forms arrive<br />
on or before last mail 30 March 2007. H<strong>and</strong> delivered Proxy Forms must be received before 2.00pm on 31 March 2007. A reply<br />
paid envelope is enclosed for the return <strong>of</strong> the Proxy Form by post.<br />
ENQUIRIES<br />
If you have any questions about voting or Proxy Forms, please contact the Share Registry on 1300 738 801 (Australia) <strong>and</strong><br />
61 3 9415 4601 (International).<br />
If you have any questions about any other aspects <strong>of</strong> the Resolutions or <strong>Meeting</strong>, please call the <strong>WorleyParsons</strong> Entitlement<br />
Offer InfoLine on 1300 738 801 (Australia) or 61 3 9415 4601 (International) or consult your stockbroker, accountant or<br />
other pr<strong>of</strong>essional advisor.<br />
By order <strong>of</strong> the Board<br />
Dated this 14th day <strong>of</strong> February 2007.<br />
Sharon Sills<br />
Company Secretary<br />
<strong>WorleyParsons</strong> Limited<br />
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Section 11<br />
Glossary<br />
<strong>of</strong> terms<br />
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Section 11 Glossary <strong>of</strong> terms<br />
The following definitions have been used throughout this Document unless stated otherwise:<br />
A$, $ or cents<br />
Australian currency<br />
Acquisition<br />
The acquisition <strong>of</strong> Colt <strong>and</strong> its Subsidiaries<br />
Adjusted EBITDA EBITDA for Colt adjusted as described in Section 3.10<br />
AEST<br />
Australian Eastern St<strong>and</strong>ard Time<br />
AGAAP Accounting st<strong>and</strong>ards in Australia applicable to <strong>WorleyParsons</strong> prior to 1 July 2004<br />
Aggregated Revenue<br />
Statutory revenue plus share <strong>of</strong> revenue from associates, excluding pass through procurement services<br />
revenue<br />
AIFRS<br />
Australian equivalents to International Financial Reporting St<strong>and</strong>ards applicable to <strong>WorleyParsons</strong> from<br />
the year ended 30 June 2005<br />
Allotment Date<br />
The Institutional Allotment Date <strong>and</strong> the Final Allotment Date<br />
AMEA<br />
Asia, the Middle East <strong>and</strong> Africa<br />
ANZ<br />
Australia <strong>and</strong> New Zeal<strong>and</strong><br />
API<br />
American Petroleum Institute gravity scale<br />
Applicants<br />
Persons who submit valid Entitlement Forms pursuant to this <strong>Prospectus</strong><br />
Application<br />
An application for New Shares pursuant to the Entitlement Offer<br />
Application Monies<br />
Monies received from Applicants in respect <strong>of</strong> their Applications<br />
Application Price<br />
$21.00 per New Share<br />
ASIC<br />
Australian Securities <strong>and</strong> Investments Commission<br />
ASTC Settlement Rules The business rules <strong>of</strong> ASX Settlement <strong>and</strong> Transfer Corporation Pty Limited (ABN 49 008 504 532)<br />
ASX ASX Limited (ABN 98 008 624 691)<br />
Board or Board <strong>of</strong> Directors The Board <strong>of</strong> Directors <strong>of</strong> <strong>WorleyParsons</strong><br />
Borrowers<br />
<strong>WorleyParsons</strong> <strong>and</strong> various members <strong>of</strong> the <strong>WorleyParsons</strong> Group specified as borrowers under the<br />
Bridge Finance Agreement<br />
Bridge Finance Agreement The bridge finance agreement entered into by <strong>WorleyParsons</strong>, the Financiers <strong>and</strong> others<br />
Business Day<br />
A day that is not a Saturday, Sunday, or bank or public holiday in Sydney<br />
C$ Canadian dollars<br />
CanCo<br />
<strong>WorleyParsons</strong> Canada SPV Ltd, a corporation existing under the laws <strong>of</strong> Canada<br />
CanCo Board<br />
The board <strong>of</strong> directors <strong>of</strong> CanCo, <strong>com</strong>prising John Grill, Bill Hall, Larry Benke <strong>and</strong> Gordon Johnson<br />
Caravel Caravel Investments Ltd, as described in Section 1.13<br />
Caravel Offer The <strong>of</strong>fer <strong>of</strong> <strong>WorleyParsons</strong> shares to Caravel Shareholders, as described in Section 1.13<br />
Caravel Shareholders Shareholders <strong>of</strong> Caravel as at 7 February 2007<br />
CHESS<br />
Clearing House Electronic Subregister System operated by ASX Settlement <strong>and</strong> Transfer Corporation<br />
Pty Limited<br />
Clearing Price<br />
The price determined:<br />
... in respect <strong>of</strong> the Institutional Bookbuild, through the Institutional Bookbuild process; <strong>and</strong><br />
... in respect <strong>of</strong> the Retail Bookbuild, through the Retail Bookbuild process,<br />
in accordance with the terms <strong>of</strong> the Underwriting Agreement.<br />
The Clearing Price may be equal to, less than or above the Application Price<br />
Closing Date<br />
2 March 2007 (or as varied)<br />
Colt or Partnership<br />
Colt, a general partnership existing under the laws <strong>of</strong> the Province <strong>of</strong> Alberta, <strong>and</strong> its Subsidiaries<br />
Combined Group<br />
The <strong>com</strong>bined businesses <strong>of</strong> <strong>WorleyParsons</strong> <strong>and</strong> Colt following the Acquisition<br />
Company <strong>WorleyParsons</strong> Limited (ABN 17 096 090 158)<br />
Completion <strong>and</strong> Complete Completion <strong>of</strong> the Acquisition<br />
Completion Date<br />
7 March 2007 or, if all regulatory approvals have not been obtained by that date, the third Business Day<br />
following receipt <strong>of</strong> the last occurring regulatory approval (or as varied)<br />
Constitution<br />
The constitution <strong>of</strong> <strong>WorleyParsons</strong>, as amended from time to time<br />
Corporations Act<br />
Corporations Act 2001 (Cth)<br />
Directors<br />
The Directors <strong>of</strong> <strong>WorleyParsons</strong><br />
Document This <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong> dated 14 February 2007<br />
EBIT<br />
Earnings before interest, in<strong>com</strong>e tax<br />
EBITDA<br />
Earnings before interest, in<strong>com</strong>e tax, depreciation, amortisation<br />
Economic Equivalent or The concept defined in Section 9.1.2<br />
Economically Equivalent<br />
Effective Date 1 February 2007<br />
Employees<br />
Employees <strong>and</strong> contractors<br />
Entitlement<br />
The number <strong>of</strong> New Shares to which a Qualifying Shareholder is entitled on the basis <strong>of</strong> 1 New Share<br />
for every 9 Existing Shares held at 7.00pm (AEST) on the Record Date, subject to rounding<br />
Entitlement Form<br />
The Entitlement Form enclosed with this Document<br />
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Entitlement Offer<br />
The <strong>of</strong>fer <strong>of</strong> approximately 22.9 million New Shares to Qualifying Shareholders, <strong>com</strong>prising the <strong>of</strong>fer<br />
made to Qualifying Institutional Shareholders before the date <strong>of</strong> this Document <strong>and</strong> the <strong>of</strong>fer made to<br />
Qualifying Retail Shareholders under this Document<br />
Entitlement Offer Period In relation to the Retail Entitlement Offer, the period from 19 February 2007 to 2 March 2007 (or as<br />
varied)<br />
EP<br />
Engineering <strong>and</strong> Procurement<br />
EPC<br />
Engineering, Procurement <strong>and</strong> Construction<br />
EPCM<br />
Engineering, Procurement <strong>and</strong> Construction Management<br />
EPS<br />
Earnings per share<br />
Escrow Agent<br />
Computershare Trust Company <strong>of</strong> Canada, as custodian, bailee <strong>and</strong> agent under the Escrow Agreement<br />
Escrow Agreement<br />
The escrow agreement entered into between CanCo, an agent for the Vendors <strong>and</strong> the Escrow Agent,<br />
as described in Section 9.3.2<br />
Escrow Period The period described in Section 9.3.2<br />
Exchange Rights Agreement The Exchange Rights Agreement entered into between <strong>WorleyParsons</strong>, CanCo, <strong>WorleyParsons</strong> Callco<br />
Ltd <strong>and</strong> each Exchangeable Shareholder<br />
Exchangeable Share<br />
The rights, privileges, restrictions <strong>and</strong> conditions <strong>of</strong> the Exchangeable Shares, as set out<br />
Provisions in the articles <strong>of</strong> amendment to the articles <strong>of</strong> incorporation <strong>of</strong> CanCo <strong>and</strong> described in Section 9.1.2<br />
Exchangeable Shareholder A holder <strong>of</strong> an Exchangeable Share<br />
Exchangeable Shares The exchangeable shares issued to the Vendors by CanCo, as described in Section 9.1<br />
Existing Shares<br />
Ordinary Shares issued before 7.00pm (AEST) on 14 February 2007 (being the Record Date)<br />
Expiry Date<br />
The date which is 13 months after the <strong>Prospectus</strong> date<br />
Extraordinary General<br />
The extraordinary general meeting to be held at 2.00pm (AEST) on 2 April 2007, as<br />
<strong>Meeting</strong> or <strong>Meeting</strong> described in Section 10<br />
Facilities The loans provided under the Bridge Finance Agreement, as described in Section 9.2.2<br />
FED<br />
Front End Design<br />
FEED<br />
Front End Engineering Design<br />
Final Allotment Date<br />
15 March 2007 (or as varied)<br />
Financial Advisor<br />
UBS AG, Australia Branch (ABN 47 088 129 613), the underwriter <strong>of</strong> the Entitlement Offer, the key<br />
terms <strong>of</strong> whose appointment are set out in Section 9.4<br />
Financiers<br />
Initially, the Hong Kong <strong>and</strong> Shanghai Banking Corporation Limited, Australia Branch, HSBC Bank<br />
Australia Limited, <strong>and</strong> the Royal Bank <strong>of</strong> Scotl<strong>and</strong> plc, Australia Branch<br />
Foreign Person Any person to whom the Entitlement Offer is not an <strong>of</strong>fer or invitation, as described in Sections 1.11<br />
<strong>and</strong> 9.13<br />
GAAP<br />
Generally accepted accounting principles<br />
GAAS<br />
Generally accepted auditing st<strong>and</strong>ards<br />
Gearing<br />
Net debt divided by the sum <strong>of</strong> net debt <strong>and</strong> shareholder’s equity<br />
Holding Statement<br />
A statement issued to Shareholders by the Share Registry setting out their holdings <strong>of</strong> New Shares<br />
HSE<br />
Health, Safety <strong>and</strong> Environment<br />
Independent Accountant Ernst & Young<br />
Institutional Allotment Date 21 February 2007 (or as varied)<br />
Institutional Bookbuild The bookbuild process conducted by the Underwriter on 13 February 2007, as described in Section 1.5<br />
Institutional Bookbuild Price The price achieved from the Institutional Bookbuild, as described in Section 1.5<br />
Institutional Entitlement Offer The <strong>of</strong>fer to Qualifying Institutional Shareholders, as described in Section 1.4<br />
Institutional Investors Persons who are “pr<strong>of</strong>essional investors” or “sophisticated investors” for the purposes <strong>of</strong> section 708<br />
<strong>of</strong> the Corporations Act or who are otherwise entitled to receive an <strong>of</strong>fer <strong>of</strong> New Shares without the<br />
need for a lodged prospectus or other registration or formality (other than a registration or formality<br />
which <strong>WorleyParsons</strong> is willing to <strong>com</strong>ply with)<br />
Institutional Premium<br />
The cash excess <strong>of</strong> the Institutional Bookbuild Price over the Application Price, as described in<br />
Section 1.5<br />
Institutional Shareholders Institutional Investors who, to <strong>WorleyParsons</strong>’ knowledge, hold Ordinary Shares either directly or<br />
through nominees as at 7.00pm (AEST) on the Record Date<br />
Interest Cover<br />
EBITDA divided by net interest<br />
IOCs<br />
International oil <strong>com</strong>panies<br />
Lead Manager<br />
UBS AG, Australia Branch (ABN 47 088 129 613), the underwriter <strong>of</strong> the Entitlement Offer, the key<br />
terms <strong>of</strong> whose appointment are set out in Section 9.4 <strong>of</strong> this Document<br />
Listing Rules<br />
The listing rules <strong>of</strong> ASX<br />
Master Transaction<br />
The Master Transaction Agreement entered into between the Vendors, <strong>WorleyParsons</strong>,<br />
Agreement CanCo, <strong>WorleyParsons</strong> Canada GP Ltd <strong>and</strong> Colt, as described in Section 9.3.1<br />
NANA NANA Development Corporation, as described in Section 3.9.1<br />
New Shares<br />
The Ordinary Shares to be issued under the Entitlement Offer <strong>and</strong> the Caravel Offer (<strong>and</strong> the Top-Up<br />
Shares)<br />
NOCs<br />
National oil <strong>com</strong>panies<br />
<strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong><br />
The notice <strong>of</strong> meeting dated 8 February 2007 contained in this Document<br />
Ordinary Shares or Shares Fully paid ordinary shares in <strong>WorleyParsons</strong><br />
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Section 11 Glossary <strong>of</strong> terms continued<br />
Parsons E&C<br />
Parsons E&C Corporation, a corporation registered in Delaware, US, <strong>and</strong> its Subsidiaries<br />
Partners<br />
Partners <strong>of</strong> Colt, each <strong>of</strong> whom is a Vendor<br />
PPA Purchase price allocation, as described in Section 5.3<br />
Pro forma EBITDA EBITDA for Colt as adjusted in Section 5.6.1<br />
<strong>Prospectus</strong><br />
The prospectus dated 14 February 2007, being all Sections <strong>of</strong> this Document other than the <strong>Notice</strong> <strong>of</strong><br />
<strong>Meeting</strong><br />
Proxy Form<br />
The proxy form enclosed with this Document<br />
Purchase Price<br />
C$1,035 million equivalent to A$1,133 at the 1 February 2007 closing rate <strong>of</strong> one Australian dollar<br />
equals 0.9132 Canadian dollars<br />
Qualifying Institutional<br />
Any Institutional Shareholder which received an Institutional Entitlement Offer (whether or<br />
Shareholder<br />
not it accepted that <strong>of</strong>fer) or a nominee for such an Institutional Shareholder, in respect <strong>of</strong> Ordinary<br />
Shares held for such Institutional Shareholder<br />
Qualifying Retail Shareholder A Qualifying Shareholder who is not a Qualifying Institutional Shareholder<br />
Qualifying Shareholders Shareholders as at 7.00pm (AEST) on the Record Date who are not Foreign Persons<br />
Record Date 14 February 2007<br />
Register<br />
The <strong>of</strong>ficial register <strong>of</strong> members in <strong>WorleyParsons</strong><br />
Related Bodies Corporate Has the meaning given to it in the Corporations Act<br />
Resolution<br />
Each <strong>of</strong> the resolutions to be considered at the <strong>Meeting</strong><br />
Retail Bookbuild The bookbuild process described in Section 1.3.4<br />
Retail Entitlement Offer The <strong>of</strong>fer to Qualifying Retail Shareholders, as described in Section 1.3<br />
Retail Premium The cash excess <strong>of</strong> the Clearing Price over the Application Price, as described in Section 1.3.4.1<br />
SAGD<br />
Steam assisted gravity drainage<br />
Shareholder<br />
A registered holder <strong>of</strong> Ordinary Shares, subject to <strong>WorleyParsons</strong>’ right, referred to in Section 9.20, to<br />
ignore post ex date transactions<br />
Share Registry<br />
Computershare Investor Services Pty Limited (ABN 48 078 279 277), Level 3, 60 Carrington Street,<br />
Sydney NSW 2000<br />
SOC Supplier <strong>of</strong> Choice, as described in Section 3.8<br />
Special Voting Share<br />
The class <strong>of</strong> share described in Section 9.1.6 <strong>and</strong> Appendix A<br />
Subsidiaries<br />
Has the meaning given to it in the Corporations Act<br />
Support Agreement The Support Agreement entered into between <strong>WorleyParsons</strong> <strong>and</strong> CanCo, as described in Section 9.1.3<br />
Top-Up Shares<br />
Any additional new shares issued to ensure all Qualifying Shareholders receive their full Entitlement, as<br />
described in Section 1.9<br />
Transaction Date 8 February 2007<br />
Trustee<br />
Computershare Trust Company <strong>of</strong> Canada, acting as trustee under the Voting Trust Agreement<br />
Underwriter<br />
UBS AG, Australia Branch (ABN 47 088 129 613), the underwriter <strong>of</strong> the Entitlement Offer, the key<br />
terms <strong>of</strong> whose appointment are set out in Section 9.4<br />
Underwriter <strong>and</strong> Lead UBS AG, Australia Branch (ABN 47 088 129 613)<br />
Manager<br />
Underwriting Agreement The agreement dated on or about 8 February 2007 between <strong>WorleyParsons</strong> <strong>and</strong> the Underwriter in<br />
relation to the underwriting <strong>of</strong> the Entitlement Offer, as described in Section 9.4<br />
US or USA<br />
United States <strong>of</strong> America<br />
US Persons<br />
Has the meaning given in Regulation S under the US Securities Act<br />
US Securities Act<br />
United States Securities Act <strong>of</strong> 1933, as amended<br />
US$<br />
US dollars<br />
Vendors<br />
The owners <strong>of</strong> Colt, including both active <strong>and</strong> inactive retired <strong>and</strong> associate Partners<br />
Voting Trust Agreement The Voting Trust Agreement entered into between <strong>WorleyParsons</strong>, CanCo <strong>and</strong> the Trustee, as<br />
described in Section 9.1.5<br />
Worley The entity now known as <strong>WorleyParsons</strong>, prior to the acquisition <strong>of</strong> Parsons E&C in October 2004<br />
<strong>WorleyParsons</strong> or Group <strong>WorleyParsons</strong> Limited (ABN 17 096 090 158) or <strong>WorleyParsons</strong> Group, as the context requires<br />
<strong>WorleyParsons</strong> Canada<br />
<strong>WorleyParsons</strong> GP Ltd<br />
<strong>WorleyParsons</strong> Entitlement 1300 738 801 (Australia) or 61 3 9415 4601 (International)<br />
Offer InfoLine<br />
<strong>WorleyParsons</strong> Group<br />
<strong>WorleyParsons</strong> <strong>and</strong> its subsidiaries<br />
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Appendix –<br />
Terms <strong>of</strong> Special<br />
Voting Share<br />
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Appendix – Terms <strong>of</strong> Special Voting Share<br />
1. Designation<br />
The share <strong>of</strong> the <strong>com</strong>pany issued with the rights <strong>and</strong> restrictions set out in these terms <strong>of</strong> issue shall be designated as the “Special<br />
Voting Share” (Special Voting Share). The Special Voting Share will be issued fully paid.<br />
2. Voting rights<br />
(a) Subject to the Constitution <strong>of</strong> the Company <strong>and</strong> applicable law:<br />
i. the holder <strong>of</strong> the Special Voting Share has a right to vote in all the circumstances in which holders <strong>of</strong> Ordinary Shares have<br />
a right to vote; <strong>and</strong><br />
ii. the holder <strong>of</strong> the Special Voting Share <strong>and</strong> the holders <strong>of</strong> Ordinary Shares shall vote together as one class on all matters<br />
submitted to a vote <strong>of</strong> members <strong>of</strong> the <strong>com</strong>pany at a general meeting.<br />
(b) On a resolution or proposal on which the holder <strong>of</strong> the Special Voting Share has a right to vote under this paragraph 2, the<br />
holder has:<br />
i. on a show <strong>of</strong> h<strong>and</strong>s, one vote; <strong>and</strong><br />
ii. on a poll, an aggregate number <strong>of</strong> votes equal to the number <strong>of</strong> votes that a holder <strong>of</strong> Ordinary Shares, into which the<br />
issued <strong>and</strong> outst<strong>and</strong>ing Exchangeable Shares held by Holders are exchangeable, would be entitled to cast.<br />
(c) Except as set out in these terms <strong>of</strong> issue, the holder <strong>of</strong> the Special Voting Share has no special voting rights <strong>and</strong> its consent is<br />
not required for taking any corporate action. In particular, unless the rights <strong>and</strong> restrictions expressly set out in these terms <strong>of</strong><br />
issue are amended, the rights attached to the Special Voting Share are not varied or cancelled by any other action <strong>of</strong> the<br />
Company.<br />
3. <strong>Notice</strong>s, attendance etc.<br />
The holder <strong>of</strong> the Special Voting Share has the same rights as holders <strong>of</strong> Ordinary Shares to receive notices, reports <strong>and</strong> financial<br />
statements <strong>and</strong> to attend <strong>and</strong> to speak at all general meetings.<br />
4. No dividends or distributions<br />
The holder <strong>of</strong> the Special Voting Share is not entitled to receive:<br />
(a) any dividend; or<br />
(b) any distribution (including capital distributions <strong>and</strong> distributions on a winding up) <strong>of</strong> the <strong>com</strong>pany.<br />
5. Cancellation <strong>of</strong> shares<br />
(a) At such time as:<br />
i. the Special Voting Share entitles its holder to a number <strong>of</strong> votes equal to zero because there are no outst<strong>and</strong>ing<br />
Exchangeable Shares held by Holders; <strong>and</strong><br />
ii. there is no share <strong>of</strong> stock, debt, option or other agreement, obligation or <strong>com</strong>mitment <strong>of</strong> CanCo which could by its terms<br />
require CanCo to issue any Exchangeable Shares to a Holder,<br />
then the Special Voting Share may be cancelled by the <strong>com</strong>pany, without payment <strong>of</strong> consideration in respect <strong>of</strong> the<br />
cancellation.<br />
(b) To the extent the law requires the holder <strong>of</strong> the Special Voting Share to vote in respect <strong>of</strong> the cancellation contemplated<br />
in paragraph 5(a), the holder <strong>of</strong> the Special Voting Share is deemed to have voted in favour <strong>of</strong> the resolution in relation to such<br />
cancellation for no consideration <strong>and</strong> must, if required by the directors, do all things to evidence its vote in favour <strong>of</strong> such a<br />
resolution.<br />
(c) In the circumstances contemplated in paragraph 5(a)(1) <strong>and</strong> (a)(2), the holder <strong>of</strong> the Special Voting Share:<br />
i. irrevocably <strong>of</strong>fers to sell the Special Voting Share to the <strong>com</strong>pany for no or nominal consideration as determined by the<br />
<strong>com</strong>pany if the <strong>com</strong>pany elects to buy back the Special Voting Share; <strong>and</strong><br />
ii. irrevocably appoints the <strong>com</strong>pany <strong>and</strong> each <strong>of</strong> its authorised <strong>of</strong>ficers severally to be the agent <strong>and</strong> attorney <strong>of</strong> the holder<br />
with power in the name <strong>and</strong> on behalf <strong>of</strong> the holder to do all such things <strong>and</strong> acts including signing all documents,<br />
including any share transfer or buyback agreement, as may, in the opinion <strong>of</strong> the <strong>com</strong>pany or its authorised <strong>of</strong>ficer, be<br />
necessary or desirable to be done in order to give effect to this paragraph 5(c).<br />
6. No Transfer<br />
The Special Voting Share may not be Transferred except in accordance with the Voting Trust Agreement between the Company,<br />
CanCo <strong>and</strong> Computershare Trust Company <strong>of</strong> Canada dated 7 March 2007.<br />
7. Interpretation clause<br />
(a) Unless the context otherwise requires, terms used in these terms <strong>of</strong> issue shall have the same meaning as ascribed to that<br />
term in the Constitution <strong>of</strong> the Company <strong>and</strong>:<br />
CanCo means <strong>WorleyParsons</strong> Canada SPV Ltd, a corporation existing under the laws <strong>of</strong> Canada<br />
<strong>com</strong>pany means <strong>WorleyParsons</strong> Limited (ABN 17 096 090 158)<br />
constitution means the constitution <strong>of</strong> the Company as amended from time to time<br />
Exchangeable Share means an exchangeable share <strong>of</strong> CanCo issued in accordance with its Articles <strong>of</strong> Amendment adopted<br />
on or about 7 March 2007<br />
Holder has or about the same meaning as given to that term in the Articles <strong>of</strong> Amendment <strong>of</strong> CanCo adopted on or about<br />
7 March 2007<br />
Ordinary Share means an ordinary share <strong>of</strong> the <strong>com</strong>pany<br />
Transfer has the same meaning as given to that term in the Articles <strong>of</strong> Amendment <strong>of</strong> CanCo adopted on or about 7 March 2007<br />
(b) The rules <strong>of</strong> interpretation applicable to the constitution shall also apply to these terms <strong>of</strong> issue.<br />
104 <strong>WorleyParsons</strong> + Colt <strong>Prospectus</strong> <strong>and</strong> <strong>Notice</strong> <strong>of</strong> <strong>Meeting</strong>
Corporate directory<br />
Company<br />
<strong>WorleyParsons</strong> Limited<br />
Level 7<br />
116 Miller Street<br />
North Sydney NSW 2060<br />
Ph: 61 2 8926 6866<br />
Fax: 61 2 8923 6877<br />
Registered <strong>of</strong>fice<br />
Level 7<br />
116 Miller Street<br />
North Sydney NSW 2060<br />
Financial Advisor, Underwriter <strong>and</strong> Lead Manager<br />
UBS<br />
Level 16, Chifley Tower<br />
2 Chifley Square<br />
Sydney NSW 2000<br />
Independent Accountant<br />
Ernst & Young<br />
Ernst & Young Centre<br />
680 George Street<br />
Sydney NSW 2000<br />
Lawyers to the Entitlement Offer<br />
Freehills<br />
Level 32<br />
MLC Centre<br />
Martin Place<br />
Sydney NSW 2000<br />
Share Registry<br />
Computershare Investor Services Pty Limited<br />
Level 3<br />
60 Carrington Street<br />
Sydney NSW 2000<br />
Entitlement Offer enquiries<br />
1300 738 801 (Australia)<br />
61 3 9415 4601 (International)<br />
Designed <strong>and</strong> Produced by walterwakefield
www.worleyparsons.<strong>com</strong>