The Wood Group board has urged shareholders to accept a 30p-a-share cash offer from Sidara, arguing the private ownership deal is the best route to stabilise the Aberdeen engineer after years of cash burn and mounting debt.
In a letter published today, chairman Roy Franklin said the board was “unanimous” in backing the bid, which sits alongside a $450million (£333million) capital injection, an extension of bank facilities to October 2028 and new liquidity lines.
Investors will now gather on November 12th to vote on whether 30p - cut from an indicative 35p in April - is the best route forward.
Mr Franklin said Wood’s capital structure had become “unsustainable”. Gross indebtedness stands at about $1.6billion (£1.2billion) and the group has not generated sustainable free cash flow since 2017, having absorbed roughly $1.5billion (£1.1billion) in outflows since then.
The board contends that alternatives - a deeply dilutive equity raise during suspension or further heavy disposals - would leave “limited to de minimis” value, and potentially none, for existing investors.
Sidara’s package includes $250million (£185million) available once shareholders approve the deal, with a further $200million (£148million) on completion.
Wood has agreed an amendment-and-extension with lenders, a fully drawn $60million (£44million) interim facility, a $200million (£148million) “new money” line to refinance it, and an about $400million (£296million) guarantee facility to support performance bonds.
There are still hurdles to overcome, as the offer is subject to “Exceptional Conditions”, notably publication of Wood’s FY24 audited accounts by 31 October without a modified opinion on the balance sheet.
Wood has been slimming down, selling its stake in RWG and its North American transmission and distribution engineering arm, with proceeds expected to exceed a $200million (£148million) target.
Wood’s shares have been suspended since May pending overdue audited results, leaving the company shut out of equity markets. The company is also co-operating with an FCA investigation opened in June into the period from January 2023 to November 2024.
Its troubles stretch back to the 2017 purchase of Amec Foster Wheeler, which brought fines, asbestos liabilities and project losses, while later lump-sum turnkey contracts, particularly in North American renewables, proved costly.
Sidara says only limited headcount reductions are envisaged post-take-private, mainly in public-company functions, with employee rights and pension obligations to be safeguarded.
It has also confirmed it plans to keep the Wood brand, folding it in as its Energy & Materials arm.