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"If lenders weren’t happy, the RNS wouldn’t say anything about debt reduction or worse, it would’ve been framed with caveats or ongoing negotiation language."

Sorry Ice but once again your reading comprehension has misled you.

The company hasn't used the proceeds to pay down the debt. They stated it lowered their net debt position and "shall be retained for use within the Company for general corporate purposes." It is being held as cash for general use. I know it's often seemed challenging for you to accept or understand the debt position of Wood and why it's so acute, but net debt is cash and cash equivalents against total debts. The asset sales are for cash which is being held, that increase in cash against a stable total debt decreases the net debt position. There has not been a "debt reduction" but an increase in the cash position.

But I'm not even sure what you're trying to argue. Of course the lenders will be happy with the asset sale. It still doesn't mean $135m is enough to stop them pressing for this takeover to derisk the rest of their exposure. Wood owe somewhere in the ballpark of $1.7bn in loans and what they've drawn from the RCF. Lenders have stomached almost 5 years of significant negative free cash flow. Selling one profitable asset doesn't solve the equation yet, it buys Wood time. They need FCF and the more assets they sell, the less assets they have to generate FCF, so it's a "game changer" only in the most incremental way possible. It's good news, but doesn't obviate the need for a takeover yet. Sorry to be a downer again for you. I know it upsets you so.

I agree with you Davius.

It's still very unlikely but it is at least plausible. They use Sidara to get the debt modifications and extensions over the line with wary lenders, then they prove FCF or near enough to it, drip feed back in some of the pension surplus to boost it, and go back to lenders and say, we think we can go it alone from here, pretty please, will you back us from here? The lenders might and probably would say no, a takeover is by far the lesser risk for them. But it might be the play the BoD are at least aiming for. It's their only hail Mary really that keeps Wood independent. I'd give it a 10% shot they pull that off. 90% still to Sidara or another as yet unseen suitor taking it over.

Agree carrot, things are still desperate, they do still need Sidara or some other suitor's interest, but maybe 25% less desperate than they were before they sold enough assets to cover the negative FCF this year. That at least buys them short term breathing room that they're not so imminently at risk of running out of cash. That's worth something to the ultimate takeover price, and surely enough to cancel our any implied penalties and risks from the FCA investigation that would justify Sidara lowering their opening offer. I would say the FCA fines will fall somewhere between £0 and a censure (for cooperation, self-investigation and remedial action like with Redcentric recently), and £10-25m (like with metro bank and rio tinto who were not so proactive at rectifying their misleading accounts).

So net net I'd say the asset sales ought to theoretically add more to the implied takeover price than the FCA investigation reduces it. But it's guesswork from my end, we'll see soon enough what Sidara and Wood ultimately agree to.

Bore off Ice.

Accusing others of being negative when you bizarrely tried to claim credit for the FCA investigation. Lest we forget that moment of lunacy from you. If anyone is relentlessly negative about the Board, the takeover, the prospect of any realization of value for shareholders, it's you. Down your path lies D4E and shareholder wipeout or administration and shareholder wipeout. Sack the board, tell Sidara to walk and sink the debt renegotiations, see how the share price does then you fool.

Against that not happening, I'm cautiously optimistic.

That's all true Carrot, but it surely matters to lenders that there's more cash/less debt == lower net debt, don't you think? The only way lenders otherwise access value from the asset column is via liquidation, which they won't really want.

And if there's a pathway to holding everything together until (if) FCF does rematerialize, then this asset sale makes that pathway incrementally more viable and credible.... and if that pathway is more viable, it might therefore wrestle back some leverage for the company that lately has entirely rested with Sidara.

That is to say, isn't it less likely to be a fire sale price if there's less of an active fire?

Having more liquidity can only mean the situation with lenders is materially less acute than it was before the sale.

"The last think we want is a debt for equity swap and second last thing we want is a rights issue, period."

Exactly this. A sale is preferable to this.

When we get the accounts, we'll know then if there is any conceivable 4th path available without further recapitalization, but the company has thus far been clear: that recapitalization is required.

Unless that messaging and reality changes, the sale to Sidara is the best path - as the company has stated.

I would imagine so Stupmy. Unless this sale was already a fait accomplis before the proposed offer was negotiated, in which case it's possible the proceeds were already factored in. But that seems somewhat unlikely, and should thus provide some recapitalization that is no longer required from Sidara.

"If you assumed the lenders are only playing nice because of Sidara, you’ve misread the room badly."

If you assume the opposite, wrongly, then you too have misread the room badly.

Go ask the lenders.

"You said Wood had “zero chance” of surviving without Sidara, now it’s a “slim chance.” That’s a shift, at least. 💯👍"

Never said that. I said they needed Sidara, which they do. They still do.

"the 450m was also longterm optionality not short term cash flow. You do seem to forget that though constantly. 🤔"

And that's YOUR opinion, not fact or reality. The company stated it needed recapitalization and was exploring all options. The $450m proposed by SIdara was that required recapitalization. It had nothing to do with, nor did it mention, being for "longterm optionality". It was clearly an urgent need to recapitalize the business, which would have also been demanded by lenders. You're still passing off your fantasy as reality.

As ever Icecool, I disagree.

As everyone else here has already pointed out, you seem as ever oblivious to the debt and the situation with lenders. You see only what you want to see.

Except those pesky folk to whom Wood owe money. You keep forgetting about them Ice when you imagine Wood don't need SIdara at all. Sidara could well be the only reason we're not currently awaiting a D4E swap. Sidara is essentially backstopping the debt for beyond wary lenders. Lenders are unhappy, but just happy enough to hold for Sidara to takeover and derisk their positions. They won't really want D4E in a troubled company, and there's no guarantee they make their money back whole in administration, so by far their preference would be a well resourced company like Sidara coming to take over. If you remove Sidara, as you want, then lenders get altogether more spooked and impatient. They would have demanded some other form of recapitalization already to not call in the debts - which they've a right to do now that Wood has admitted to breaching their debt covenants.

If the cash position can remain neutral this year after asset sales, which now seems likely; and lenders are won back over somewhat with restated, audited and at last, credible accounts, there might be a chance Wood are maneuvering to simply use Sidara's interest/bid to shore up negotiations with lenders to get extensions/modifications over the line.

Clearly we won't know until we see the accounts, but between the decent flow of contract wins and asset sales, there might be enough for lenders to give Wood that last yard of rope to run with. FCF positive heading into next year (for real this time) and a slow release of the pension surplus might yet be just enough for Wood to stay on the right side of everything.

It may still seem like a relaively small outside chance at this stage, which it is. They will still need Sidara's interest, if only to stop lenders from pulling the plug, but things seem incrementally less acute now that they're at least mostly covering this year's negative FCF.

Https://www.fca.org.uk/news/press-releases/rio-tinto-plc-fined-%C2%A327m-breaching-disclosure-and-transparency-rules

Another good example would seem to be Rio Tinto back in 2017.

They were fined £27m for:

"breached the Disclosure Rules by failing to carry out an impairment test and to recognise an impairment loss on the value of mining assets based in the Republic of Mozambique which it acquired in August 2011 for US$3.7 billion when publishing its 2012 interim results (published 8 August 2012).

Had Rio Tinto complied with its obligation to carry out the test, a material impairment would have been required to have been disclosed at the time of its 2012 half year financial reporting. Rio Tinto’s financial reporting was therefore inaccurate and misleading. This continued until 17 January 2013 when Rio Tinto announced an impairment of the Mozambique assets, writing off approximately 80% of the value of the investment in the Mozambique mine.

....

Despite the modelling results, Rio Tinto decided that it would not carry out an impairment test, as required by international accounting standards, to assess whether an impairment was required to be recorded in its financial reporting of its 2012 half year interim results. Instead, Rio Tinto decided there was a lack of clarity around how it would develop the mines which made it premature to revalue these assets. For this reason, and wrongly, Rio Tinto decided it was appropriate to continue to value the mining assets at the acquisition price.

The FCA considers that this demonstrated a serious lack of judgement. There were indicators of impairment for the Mozambique assets which meant that Rio Tinto was required to carry out an impairment test."

----

They were fined "reflecting the size of the company" £27m. Rio Tinto is approximately 10-15 times bigger than Wood as a company. The restatement was approximately 80% write-off on a $3.7bn asset. Mathematically, it's highly unlikely Wood's required restatements will be anything close to that magnitude. Rio Tinto also didn't appear to have identified or remediated the breach themselves. So again, £27m would have to be seen as a hard upper limit on Wood's exposure, else they would rightly have a claim to be hard done by compared to similar breaches.

So again, by my estimation, the fine is likely to be somewhere between a censure and £10m, to be proportionate and commensurate with prior FCA judgements. Sidara shouldn't be able to use the FCA investigation to lower the proposed offer by much more than a penny. I trust Wood's Board and Institutional Investors will appreciate this already.

Digging through the history of the FCA, there's a few relevant case studies.

Back in 2022, the FCA brought a presecution against two executives at Redcentric, on charges of making falase or misleading statements to the markets and false accounting. The FCA, having found Redcentric to have "issued false and misleading interim and audited financial results which misstated its cash position" chose not to prosecute or fine the Redcentric PLC itself:

"Redcentric's extraordinary cooperation with the FCA's investigation and the remedial action that it took were the primary reasons the regulator opted to impose a public censure on the company, instead of a more punitive course."

https://www.mishcon.com/news/misleading-market-statements-and-false-accounting-why-the-fca-did-not-penalise-redcentric

In another example that year, the FCA chose to fine Metro Bank £10m for "publishing incorrect information to investors".

They found that:

" Metro Bank published incorrect information concerning its RWA figure in its third quarter trading update (the October Announcement) on 24 October 2018.

Metro Bank was aware at the time that this figure was wrong and failed to qualify it or explain in the October Announcement that it was subject to an ongoing review and would require a substantial correction. Metro Bank also failed to consider, and to seek legal advice on, whether the incorrect RWA figure ought to be qualified or explained in the October Announcement. As a result, Metro Bank failed to take reasonable care to ensure that the October Announcement was not false and misleading and did not omit relevant information."

I think it's probable that Wood's situation is somewhere in the ballpark between the two. Obviously they have done much that Redcentric did which allowed them to avoid a fine - namely, Wood commissioned its own Review to uncover misstatements themselves; are presumably cooperating fully with the FCA; and have already initiated remedial actions. The FCA may look upon this kindly, as they did with Redcentric, and instead choose to pursue individuals rather than the business, should any improper conduct be found.

If it falls less favourable and towards a fine, then SIdara might expect something around the £10m ballpark that (a much less repentent) Metro Bank faced.

If £10m, then an adjusted offer to £232m might be the greatest extent of the adjustment, which would amount to ~33.5p per share. Lowering it to any less than that would likely be overstating the legal exposure from the FCA investigation.

The odious Metatron is your father in this story?

Cheers bob, mid August sounds credible so I'll take that as a loose estimate.

Do you really hear no internal rumours about the progress of the audit? It's almost hard to believe they're managing to keep such a tight ship on that. such that we still have no loose ETA at all.

Oh dear bob, that doesn't sound very good. Sounds more than ever like the group needs this Sidara bid to be formalized sooner rather than later.

"so the amount owing to lenders currently stands (as per last available accounts) at $690m (ignoring leases)."

I give up pal. It's there in the company accounts. They owe more than this. 690m is NET DEBT, not TOTAL DEBT.

Bad bot.

I dunno if you're a malfunctioning bot biffbaff, but that's the same post you made earlier with added parenthesis, and you're still seemingly not understanding the difference between total debt and net debt. It's not just about not including leases. Wood are in more total debt, excluding leases, than 690m.

Total debt facilities amount to $1.75bn (this does not include leases, ignore the leases for now).

Of that $1.75bn Wood have drawn (we can't know for sure until we see the accounts but extrapolating from 2023 accounts until now with FCF estimates and asset sales) over $1bn but maybe upwards of $1.2bn. That's the total debt. Somewhere between $1bn and $1.75bn, excluding leases. Not 690m.