PERTH (miningweekly.com) – ASX- and JSE-listed DRA Global on Friday announced an A$8-million agreement to sell the Queensland-based G&S Engineering Services and G&S Support Services divisions to Kaefer Integrated Services.

G&S has a 25-year track record of delivering services to the Australian resources sector, with a focus on maintenance and shutdown services and structural mechanical piping (SMP) construction services.

DRA previously announced the cessation of its APAC construction business. The company told shareholders that G&S is currently loss-making, as a result of some poorly performing construction projects, and is no longer considered a core part of DRA’s activities.

“DRA has been undertaking a strategic review of its business, to ensure that we re-focus on our core strengths of engineering, project delivery and operations management. G&S, with its focus on operational maintenance, SMP construction and shutdown services, is not part of this core focus,” said DRA interim CEO James Smith.

“We believe the G&S business will be best served under the ownership of Kaefer, where it can benefit from having an owner that is strategically aligned to providing the required investment and management focus.”

The sale will comprise selected contracts, assets and liabilities from G&S, and is subject to Kaefer receiving approval for key regulatory licences held by G&S, the replacement of existing financial guarantees or other financial securities provided by G&S under contracts, the execution of a transitional service agreement, and novation of key contracts.

DRA said on Friday that net proceeds from the sale will be applied to the funding of remaining net working capital and to reduce the residual liabilities of G&S. Current claims, which are the subject of existing litigation to which G&S is a party, will not transfer to Kaefer and will continue to be managed by the DRA Group.

Meanwhile, The company is also accelerating commercial negotiations to reach settlement on certain loss-making contracts that will not be transferred to Kaefer.