Clough writes off $110 mln in disputed oil/gas contracts

Clough said on Thursday it would write off $110 million against the disputed G1 oil and gas contract with ONGC in India, and the BassGas contract with Origin Energy in Victoria.

The engineering group said the writedown was in response to recent actions taken by the clients on the G1 and BassGas projects that rendered the outcome of each project uncertain.

The company said its major shareholder, South African-based engineering and construction group Murray & Roberts, had agreed to financially support a recapitalisation of the company.

Clough is planning a $40 million rights issue, with Murray & Roberts providing guarantees for a standby facility of $20 million.

Murray & Roberts has also agreed to provide further guarantees of $150 million to support financing a vessel upgrade and the acquisition program announced in February, Clough said.

Clough chief executive John Cooper said the restructuring of the company's balance sheet was necessary to plan for the future.

"The proposed recapitalisation enables the company to deal with the consequences of three very damaging and expensive contracts, which have been adversely impacting our recent past," Cooper said.

Origin and its partners in the BassGas project are in dispute with Clough over cost overruns at the project, while ONGC has terminated its contract with the engineering group at G1 and called upon Clough's $US21 million ($A24.38 million) bank guarantees.

A Clough spokesperson said that without the writedown the company would have reported a net profit for the financial year, ahead of expectations.

"Even though our underlying business is profitable and has been for the last 18 months, because we're taking this provision it is going to affect our full-year results," the spokesperson said.