Wood Group has called a General Meeting later this month to seek shareholder approval to temporarily suspend the company’s borrowing limit.
The energy services giant said the move is necessary after it became clear that, once its 2024 audited accounts are published, its borrowings will exceed the limit set out in its articles of association.
Wood said a breach would have “serious and adverse implications” for liquidity and could materially risk the Sidara takeover deal, which will go in front of shareholders for approval in November.
The Board unanimously recommends shareholders vote in favour of the resolution.
The borrowing cap is tied to the company’s adjusted capital and reserves, based on its latest audited balance sheet.
The Board is proposing that the borrowing limit be disapplied until 31 October 2028, allowing the Group to continue financing its operations.
In an update to shareholders this morning, the Aberdeen-headquartered firm said a default "would have a significantly adverse effect on the Company's liquidity position".
The market update adds: "It would also materially risk jeopardising the acquisition (by Sidara), which remains critical to the company's future, or any other potential transaction where shareholders would receive any value for their shares.
"It is therefore imperative that the borrowing limit is disapplied prior to publication of the audited accounts."
Shareholders will meet to discuss the proposals on Thursday October 23rd.