MACMAHON HOLDINGS LIMITED — M&A Activity 2008

Aug 19, 2008

Wednesday 20 August 2008

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ASX Announcement

INCREASED TAKEOVER OFFER FOR AUSDRILL

Macmahon Holdings Limited (“Macmahon”) is pleased to announce a material increase in consideration under its takeover offer (“Offer”) for Ausdrill Limited (“Ausdrill”) (“the Increased Offer”).

Under the Increased Offer:

• Ausdrill shareholders will now receive 1.65 Macmahon shares per Ausdrill share, representing an increase in scrip consideration of 13.8% compared to the initial Offer terms; and

• Macmahon proposes to vary or waive some of its rights under the Offer terms to allow Ausdrill shareholders to retain (or receive the benefit of) the final dividend for the year ended 30 June 2008 ("Final Dividend") at least up to 5 cents per Ausdrill share, and will make a determination about this once the Final Dividend has been declared by Ausdrill.

Subject to Macmahon's determination in relation to the Final Dividend, the amount of the Increased Offer is final . This means that it will not be further increased in the absence of a Competing Proposal[i] .

IMPACT OF THE INCREASED OFFER

Macmahon’s initial Offer terms have already provided a premium of 32.7% to Ausdrill’s pre-bid price[ii] .

Macmahon’s Increased Offer delivers an increase in the exchange ratio from 1.45 to 1.65 Macmahon shares for every Ausdrill share, an increase in scrip consideration of 13.8% . This additional premium represents significant value for Ausdrill shareholders, and Macmahon urges them to seriously consider and accept the Increased Offer.

The amount of this Increased Offer is final, and will not be further increased in the absence of a Competing Proposal, subject to Macmahon's determination in relation to the Final Dividend..

A SUBSTANTIAL INCREASE TO AN ALREADY GENEROUS OFFER

Commenting on the Increased Offer, Mr Nick Bowen, Macmahon’s Chief Executive Officer, said, “This substantially increased offer provides Ausdrill shareholders with further consideration on top of what was already an above-average takeover premium. Ausdrill shareholders have the opportunity of capturing this attractive value whilst benefiting from the stronger returns and upside available to all shareholders in Macmahon’s larger, more diversified and lower risk business”.

Macmahon today announced an increase in underlying basic earnings per share for the 2008 financial year of 43.8% which compares to the 8% growth for Ausdrill over the comparable period referred to in Ausdrill’s own Target’s Statement.

In considering whether to accept the Increased Offer, Macmahon suggests Ausdrill shareholders consider how Ausdrill’s shares may trade should Macmahon’s offer lapse.

Macmahon believes Ausdrill’s share price will drop to well below the $1.95 level at which Ausdrill had been trading prior to the Offer, given recent equity market falls. Applying a market decline of 18% (being the decline in the ASX 300 since Macmahon’s initial Offer was announced) to Ausdrill’s pre-bid price of $1.95 implies an Ausdrill share price of approximately $1.60 per share in the absence of the Macmahon bid. A fall to these levels may be further exacerbated by Ausdrill’s historical lack of liquidity, particularly as arbitrage investor positions are unwound.

Level 3 263 Adelaide Terrace Perth WA 6000 PO Box 198 Cannington WA 6987 Telephone: (08) 9365 1111 Facsimile: (08) 9365 1186 Web: www.macmahon.com.au Email: info@macmahon.com.au

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Macmahon Holdings Ltd ABN 93 007 634 406

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Ausdrill’s Board has to date elected not to commission an Independent Expert’s Report. Given the increase in the consideration offered, Ausdrill’s current share price, the absence of an Independent Expert’s Report and the likelihood that Ausdrill shares will trade down materially in the absence of the Macmahon bid, Macmahon expects the Ausdrill Board to come under significant pressure should they continue to recommend that shareholders reject Macmahon’s Offer.

INSTITUTIONAL ACCEPTANCE FACILITY

Macmahon encourages all Ausdrill shareholders to accept the Increased Offer now, but recognises that there may be some shareholders who are supportive of the offer but may not be willing or able to accept the Increased Offer before it becomes unconditional.

In order to enable certain shareholders to indicate their intentions to accept the Increased Offer, Macmahon will established an acceptance facility (“Institutional Acceptance Facility”) open by invitation only for eligible wholesale clients (as that term is defined in the Corporations Act) who hold at least A$500,000 worth of shares in Ausdrill (“Eligible Shareholders”). Macmahon believes the Institutional Acceptance Facility will assist in ensuring an efficient and informed market in Ausdrill Shares and encourages all Eligible Shareholders to take advantage of it.

INTENTION TO ALLOW SHAREHOLDERS TO BENEFIT FROM FINAL DIVIDEND

In accordance with clause 6.6 of the terms of the Offer (set out in Appendix A to Macmahon's Bidder's Statement dated 22 May 2008), Macmahon is currently entitled to the benefit of, amongst other things, any dividend declared or paid by Ausdrill after the date of announcement of the Offer.

Ausdrill has not yet announced its Final Dividend for the financial year ended 30 June 2008. The consensus of the brokers covering Ausdrill is that the Final Dividend will be 5 cents per Ausdrill share ("Consensus Estimate")[iii] .

Macmahon proposes to vary or waive some of its rights under clause 6.6 of the Offer terms to allow Ausdrill shareholders to retain (or receive the benefit of) some or all of the Final Dividend, and will make a determination about this once the Final Dividend has been declared.

Macmahon intends to allow Ausdrill shareholders to retain (or receive the benefit of) the Final Dividend at least up to the amount of the Consensus Estimate.

FURTHER DETAILS

The Increased Offer will close on 16 September 2008 , unless otherwise extended.

Further information relating to the Increased Offer will be provided in Macmahon’s First Supplementary Bidder’s Statement, to be released shortly.

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For more information, please contact:

Media contact: John Phaceas Porter Novelli Mobile 0411 449 621 Investor contact: Matthew Wright Investor Relations Mobile 0432 897 837

i Competing Proposal in this announcement refers to any proposal from or involving a third party in relation to Ausdrill by way of takeover bid, scheme of arrangement, material placement or other transaction having substantially similar effect.

• ii Based on an initial offer of 1.45 Macmahon shares for every Ausdrill share, and prices of $1.785 (Macmahon) and $1.95 (Ausdrill) on 20 May 2008, the day before the announcement of Macmahon’s Offer.

iii Assuming consensus Ausdrill dividend estimates of 10 cents per Ausdrill share, including 2008 interim dividend of 5 cents per Ausdrill share declared on 22 February 2008.

Macmahon Holdings Ltd ABN 93 007 634 406

Level 3 263 Adelaide Terrace Perth WA 6000 PO Box 198 Cannington WA 6987 Telephone: (08) 9365 1111 Facsimile: (08) 9365 1186 Web: www.macmahon.com.au Email: info@macmahon.com.au