After years of cutbacks and huge staff losses, WorleyParsons is opening its corporate wallet and will expand into the North Sea after buying AFW UK Oil & Gas for $303 million, but not before asking big shareholders for help.
WorleyParsons will raise new capital to pay for the acquisition via a 1 for 10 full underwritten, pro-rata, accelerated entitlement offer to big shareholders. Around 24.8 million new WorleyParsons shares will be issued to raise $322 million.
Fund managers are being offered shares at $13.00 apiece an 8.7% discount to the last trading price of $14.24 and an 8% discount to the theoretical ex-rights price of $14.13. The find raising was done yesterday.
WorleyParsons shares rose 5.3% fast week and are up 46% since the start of this year as world oil prices have steadied and risen to around the $US50 – $US55 a barrel level from the long slide from mid 2014 to early 2016.
That saw WorleyParsons and dozens of other companies in the energy sector slash spending, investment, staff numbers and write down the value of key assets to keep their heads above water.
A one stage the company was on every analysts takeover list and the Dar group from Dubai raided the company’s share register in February and gabbed a 13% stake and then built it stake to 19.9% by April of this year.
Takeover speculation more than anything else has helped drive the share price to current levels around $14. The shares have almost doubled in the past year from a low of $7.71 to Friday’s close of $14.24.
The enterprise value of the purchase will be $A303 million before adjustments for surplus working capital and cash in the AFW UK business, WorleyParsons’ statement said.
The acquisition comes from Amec FosterWheeler which has to divest its UK assets to assuage competition concerns related to its takeover by the UK’s John Wood Group.
Reuters said the sale is an attempt by Amec to get regulatory approval for its merger with John Wood Group.
Britain’s Competition and Markets Authority (CMA) said in August the merger could lead to competition concerns in the supply of engineering and construction services and operation and maintenance services on the UK continental shelf.
Worley Parsons said yesterday the acquisition would accelerate its strategy to build “world class global maintenance, modifications and operations (MMO) capability” in its integrated solutions business.
WorleyParsons chief executive Andrew Wood said the company would become "a leading player" in the North Sea market, based in Aberdeen, and would allow the company to create a global MMO business capable of "driving medium term growth."
WorleyParsons reckons deal will reduce net debt and be accretive to its earnings per share in the first year of ownership
The company’s biggest shareholders, Dubai-based Dar Group and chairman John Grill, have agreed to take up their entitlements in the equity raising. The acquisition is expected to be completed by the end of this month.
Core clients for AFW include BP, ConocoPhillips, Shell, Fairfield, Nexen, Maersk, Repsol, Sinopec and Engie.
The company currently commands around 20-25% of the current operations and maintenance market compared with only 10% a decade ago. It has offices in Glasgow as well as Aberdeen and employs around 3,000 people.
