COMPANY NEWS Tutor Perini buys Frontier Kemper's expertise Jun 2011
Shani Wallis, TunnelTalk
Separately, Tutor Perini and Frontier Kemper are working on top-tier tunneling projects in the United States. Both are consistent top-400 contractors in the famed ENR annual survey and both have a long tunneling track record.
Frontier Kemper is a JV partner on tunneling projects on the east and west coasts and has worked also in Canada, counting among its recent and current contracts successful completion of the Seymour-Capilano TBM water tunnels and the Ashlu Creek hydropower headrace tunnel in the
Vancouver region of British Colombia, Canada, the U-Link metro and Brightwater projects in Seattle.
For its part, Tutor Perini is a 45% JV partner with Dragados of Spain in the recently awarded mega design-build TBM bored tunnel Alaskan Way viaduct replacement project in Seattle and is a JV partner with Southland on the New Irvington water tunnel for the San Francisco water authority in Northern California.
Now, the two are to report to the same board of directors. Last week Tutor Perini confirmed its 100% acquisition of the Frontier-Kemper Constructors, Inc stock from previous owner Deilmann Haniel International Mining and Tunneling GmbH of Germany. In a press release, Tutor Perini said that it paid US$61million for Frontier-Kemper and confirmed that it assumed also $52 million in debt, paying off $35 million of that at closing of the deal.
Tutor Perini - itself the product of a merger between Perini of Massachusetts, which had a major contract on the Big Dig underground highway project in Boston, and Tutor Saliba of California that contributed running tunnels to the early Los Angeles Metro work - is a diversified civil and building construction company that had $3.2 billion in revenue in 2010.
Breakthrough of recovered Seymour-Capilano drives

Breakthrough of recovered Seymour-Capilano drives

In a call to Tutor Perini, Executive Vice President & CFO Kenneth Burk, confirmed to TunnelTalk that Frontier-Kemper will keep its name and will operate as a subsidiary to the new owner under its existing senior management structure under President and CEO, Dave Rogstad. "The acquisition certainly gives us the opportunity to increase our presence in the specialist tunneling industry which we see as a significant growth area into the near future," he said.
Frontier-Kemper and Tutor Perini are currently working together in JV on the Bowery Bay project in New York and have joint ventured on tunnel projects in the past. Burk did not respond to direct questions about the specifics of the deal but did say that "tunneling is a small, specialized industry and with the two companies knowing each other for a long time, there was a mutual coming together to develop and conclude the transfer of ownership."
Under the new ownership, he said that the two companies will bid new contracts in joint venture (bidding together this week and coming top in a tight competition for the running tunnels of the San Francisco Central Subway extension project) and that both would also be free to enter joint venture agreements independently of each other.
Tutor Perini is a 45% partner in Seattle's Alaskan Way mega bored tunnel project

Tutor Perini is a 45% partner in Seattle's Alaskan Way mega bored tunnel project

Speaking of the parent company's interest in the Seattle Alaskan Way bored tunnel project, Burk said it was not envisaged that Frontier Kemper would become involved in that project. "We have the contract with our Spanish JV partners and we don't see any reason for Frontier Kemper to become directly involved on that project."
Together with some very successful projects, Frontier-Kemper, which has a strong presence in the mining industry, is also JV partner in some difficult projects, high among them the Central Tunnel Contract for the Brightwater conveyance tunnel project in Seattle with JV leader Vinci and partner Parsons RCI. It had $148 million in revenue in 2010 and is currently working on a $290 million backlog.
In speaking of the deal, Rogstad said in a press release statement: "We are proud of the solid reputation we have achieved in our industry over Frontier-Kemper's 110-year history of reliable execution. Joining Tutor Perini presents exciting opportunities for both our customers and employees. We are eager to leverage Tutor Perini's national presence and civil expertise to expand our reach and capture new opportunities."
Ronald N. Tutor, Chairman and CEO of Tutor Perini, said: "Frontier-Kemper is an ideal fit for our civil business and will significantly bolster our tunneling business in the United States and expand our reach into Canada. They have a proven track record of timely execution of complex projects for their customers. We welcome the Frontier-Kemper employees to Tutor Perini and look forward to the opportunities ahead."
Tutor Perini paid for the deal with money from senior notes sold last year.
Alaskan Way a done deal - TunnelTalk, Jan 2011
Mobilization of Seattle's U-Link extension - TunnelTalk, July 2010
TBM drive done at Ashlu Creek - TunnelTalk, April 2009
New Irvington Tunnel award - TunnelTalk, July 2010
Brightwater plan and rescue strategy - TunnelTalk, May 2010
Central Subway bid result - TunnelTalk, June 2011

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