Member Info for Kando

While I disagree that the proposed financing from Sidara is for "long term strategy" and not, as it seems, to be for near term liquidity, I have been trying to game out other ways of recapitalizing the business or stabilizing the cash burn without the Sidara bid.

One of the joker cards in the deck would still seem to be the ~$395m pension surplus. Prior to the review, the plan as communicated was to be to return some 50m a year from that back to the company, but this was deferred pending the conclusion of the review. If this were to be negotiated and actioned now that the review is being concluded, and if they could even stretch that, perhaps to $75m for 3 years, for $225m total (which I believe would still leave the pension with an acceptable asset to liability coverage), then that could halve this years FCF burn and significantly improve the likelihood of next year's FCF being roundly positive (with the number of exceptionals rolling off the books).

Then, with half of Sidara's proposed 450m in emergency funding covered by a feed in from the pension surplus, and FCF burn for this year and next made to look less intimidating, maybe it would move the dial enough with lenders to allow an extension of existing facilities for the other 225m.

This would all be contingent on the Pension Trustees agreeing however, and they wouldn't be under any obligation, as far as I can tell, to do so, if they believe it not to be in the interest of their members or the fund. But at the moment it's an off balance sheet asset of nearly 400m, of which half might be transferable. This should offer some leverage at least, if they were to acquiesce.

"But this deal structure — giving cash now, turning it into debt if the deal fails — is a strategic trap. It makes rejecting Sidara very risky, even if shareholders want to hold out."

Agree that it's very much this. The only way for the company to escape this is some helicopter money from elsewhere, which from the company's communications, seemed unlikely at the time of the last offer update.

But, who knows. £250m of the £450m might be enough to tide the company over if recent trading is by some miracle, much improved - in spite of the macro uncertainty - and FCF really does materialize next year. Borrowing £250m is both not an astronomical amount in the context of £450-500m EBITDA, but it's an awful lot when you've just broke debt covenants and admitted multi-year accounting fraud. It's would more or less rely on the kindness of strangers for Wood to navigate this without a takeover, but so far all they've told us is that other forms of financing and recapitalization are worse than the current Sidara offer.

Except CaptainSwag is still right, you shouted me down yesterday for pointing out the same thing.

The company and the board of directors have told you that the company NEEDS recapitalizing.

They have told you they have been exploring ALL options for recapitalizing the company.

The board and its third party financial advisors have told you that the deal currently represents the BEST value against all other options.

If 35p and Sidara's financing is the BEST option, that tells you simply taking out more debt is not an option.

That tells you that a sale at 35p has been calculated to offer greater stakeholder value than a rights issue or debt for equity swap is likely to yield - which should be common sense. Raising ~450m (the number the company and Sidara deem necessary to recapitalize the business) when the mcap is 125m is wipeout territory by dilution. Isn't this obvious?

There are no other options. The company says its capital structure is weak. You don't believe them. The company is telling you it doesn't have the cash to keep burning through cash. You don't believe them. They're telling you a sale solves otherwise irreconcilable problems. You don't believe them.

You folk keep rallying around this fantasy that the company is fine and the board just need to be sacked and Sidara told to jog on. That it's going back beyond a quid without any outside help at all. The board disagrees. Its financial advisors disagree. Sidara disagrees. Yet you still don't believe them, ranting from your armchairs, shouting down other users.

Well, if AberdeenAndy's post from this morning actually came from reliable sources within, and has any factual basis that:

Wood using only 1/3rd of available cash;

Sidara liquidity to assuage lenders over sale and not cash flow crisis bailout;

Talks with two other prospective bidders;

Accounts expected end of next week.

Then yeah, 30% up would be the least you'd expect, with more to come, if any of that is substantiated further.

"Kandi..the takeover will take time and dd.

If someone were to wait until accounts came out..it will be too late. Sid are that far ahead."

It's Kando. And no, it's not too late until after a shareholder vote accepting an offer. The board doesn't unilaterally accept an offer on everyone's behalf, locking out any other bidders. Anyone else can bid at any time. It doesn't matter how "far ahead" Sidara are. Anyone can start their DD whenever they're ready to engage with the board, as long as it's before Sidara's offer is voted through.

"There are no other interested offers...we would have heard by now."

That's also not necessarily true. If there were any other interested parties they'd be in no hurry to make that interest public. They would wait for the audited accounts to make their own assessment of worth, to work out if they can or would be willing to compete with Sidara's bid. There was never going to be a mad rush to start a bidding war when the share was facing/is now in a suspension, with a review ongoing and accounts to be restated. Anyone interested would wait until Sidara's initial firm offer, otherwise they'd spook Sidara into offering a higher initial price and starting any bidding war at a higher price.

There may well turn out to be no other bidders, but you don't and wouldn't know that at all, at this stage.

"Kandı,

why did you get frustrated on wood stating on its own? Don’t you like to see the business doing good? Oh wait you want it to be destroyed instead!"

Frustrated that you want our bidder to walk away when the Board of the company have told you that this is the least disastrous option? Yeah that's pretty daft. If it happens, it'll be frustrating for everyone. A highly dilutive capital raise or d4e deal isn't likely to put you in profit for many years, but more likely, ever.

And no, the company is not "doing good". It's RNSed that it will have negative cash flow 150-200m in a year it was going to be "broadly positive", that it thinks it's capital structure is weak, that they can't keep burning cash they are running low on, that it put out fraudulent accounts in multiple prior years, lied to auditors, breached historical debt covenants, and has a year or so to renegotiate a fairly large debt pile - which was always going to be difficult given the macro environment, but made almost nightmarish once you admit to your lenders that you committed fraud and breached covenants. The company has literally put itself up for sale, and in the meantime is selling parts of itself. What part of that is "doing good"?

You guys are fantasists, clearly, so let's hope you don't get your way, and Sidara don't walk away. That would be a disaster. Instead, let's hope other bidders improve the price being offered.

Yeah, anyone championing Sidara walking or being told to leave is a turkey voting for christmas. The Sidara bid is at the moment, and has been, essentially the only thing supporting the share price.

Breaching debt covenants, admitting to accounting fraud, missing positive free cash flow forecast for this year, large debt pile maturing, running low on capital, all this is the material reality of the company in May 2025. Telling the one bidder who's offering you a life raft at a premium to the current share price, to "shove it" is just plain idiotic. The Sidara bid and financing offer might be the only reason Wood are able to renegotiate their debt and why lenders might give them more rope re: breaching the debt covenants.

It's unclear which clan are more deranged. The "it's OVER, adminstration" crew or the "reject all offers, just change the board and this is going to 3 quid on its own". Both sound like donkeys.

We know, you say it 30 times a day.

We know, you say it 30 times a day.

"as they are awaiting accounts, (on track for issue end of next week)."

If this turns out to be true, then I'd give more credence to the rest and the idea of the other two bidders. The cash position is also reassuring, if true, that things are not so acute as they lately seemed.

So not long to wait, which would be a great relief if it really is that short of a suspension. I had been bracing for a several month suspension at a minimum.

So you've said, 100 times, but it's a Saturday dogger, and even if it weren't Saturday, the share is going to be suspended for several months. Even if you could convince any sucker to sell with your endless doomloop, nobody can sell even if they wanted to. You're really only hurting yourself, wasting your own weekend and spamming a board that's indifferent to it. Everyone who's in is in on the calculus of the proposed offer, nothing you can say will change that now.

And incidentally, if PFC is your model (which isn't a very good one), when it missed posting accounts last year and had it's shares suspended, it rose 150% in the 4 days following the end of that suspension. So little wonder you're sweating your short, if that happened here you'd be wiped out in the gap up towards the Sidsra offer price, worse if another bidder showed interest.

Well put post Davius. More or less sums up the situation.

It's no conspiracy that the board are recommending the 35p offer as the least miserable path. The breaching of historic debt covenants and a pending restatement of prior year accounts, in addition to no current year audited accounts means that borrowing more, as of today, is more or less impossible. There's some fantasists on here deluding themselves that there is no cash flow crisis, but there simply is. The situation and share price says there is. The company is selling off parts of itself to cover negative FCF; put itself wholly up for sale; is exploring every avenue of capital raising; and has concluded a takeover at 85% discount to the last offer is the least worse outcome of all of those. That's a cash flow crisis. It doesn't have enough to keep burning cash at the rate it has been. It probably has enough until Oct 26, but unless free cash flow materializes in the meantime, it won't have any wiggle room to survive any more internal or external shocks, which seem uncommonly common for Wood these days. That's a fairly acute crisis and banks will probably have made it clear they're not willing to lend any more at this juncture, hence no talk of more borrowing outside of Sidara's proposed financing.

That being said, the current offer for the company takes advantage of the acuteness of this crisis. It would seem like a bargain price for a company with strong underlying earnings, nearly half a billion in ebitda, and the makings of decent cash flow once exceptionals work through. One could entertain the idea that once the restatements and audited accounts come out, and all the unknowns are known, that someone else might then be willing to step in with a competing bid. They'd be in no hurry and you shouldn't expect it before the accounts are out, but given the board has publicized its willingness to accept any bid, and shareholders have been braced for an already punishing price and would immediately be on side to any improved offer, it might appeal to some that they could secure it for anything less than 1bn (450m refinancing + up to 500m bid).

But, absent that bid, the Sidara takeover is currently the best and most likely outcome.

It's in the RNS. Extended to June 30th.

One might make the assumption that they might expect accounts to be completed by then.

"If it were truly a terminal cash flow issue, we’d have had a profit warning, revised guidance, and a desperate scramble to plug a funding hole."

We have had all those things. This is the desperate scramble to plug a funding hole, including putting itself up for sale. This is it. With the company exploring all options to raise capital. FCF guidance for this year has been revised from positive to negative. All the things you say we haven't had, we've had.

It's not necessarily fatal, but it is what it is, your denying it seems counterproductive. You're going to keep pricing it wrong if you can't see the wood for all the trees.

If you REALLY think about it Ice, it is a cash flow crisis. It might not be a terminal one, but it is a crisis caused by negative free cash flow over a number of years.

He didn't sell. Some of his Employee Share Plan shares vested and the Plan sold a small portion for him to cover the tax liability, £2619's worth. He would not be allowed to sell while under takeover rules.

Yeah it does literal say it in the RNS:

"Nature of the transaction

(i) Vesting of nil-cost matching partnership shares under the Wood Employee Share Plan; and

(ii) Sale of partnership shares under the Wood Employee Share Plan to cover tax liabilities"

The plan sold £2619 worth on his behalf, along with other executives also in the Employee Share plan, to cover their tax liabilities of their vested shares. I don't believe he would be allowed to sell, even if he wanted to, while under takeover rules.

Because he's a perennial donkey Robert, you're not going to get an explanation from dogger. His account is a history of losing big on MTRO and NMC, and ever since all he does is post "IT'S OVER" on every share that's down. Take a look.

Administration is not something that's on the cards. Takeover, refinancing, capital raise, debt for equity. All these are on the cards, some of those cards being not so great, but administration is not yet one of them. The takeover is the card we're playing right now, since there is a conditional offer from a serious party, with board support that may yet draw out more interested parties.

The share price is where it is because the share is about to be suspended. Almost no-one is going to be comfortable holding into a suspension with no guidance on a timeline, so selling pressure was inevitable. But the day the share leaves suspension, meeting the conditionality of the offer, it's not improbable that this gaps up closer to the offer price. The suspension is the black box you're puitting your money in in the expectation of a return at the end of it. But it's not a black box that contains administration. The company has a weak capital structure at the moment, such that it can't continue indefinitely while it keeps posting negative free cash flow, but it still has enough to pay the bills until next October, and it's hard to see it taking until then to publish FY24 accounts.

Is there anyone here with any experience working on audits of this scale, on the likely timeline and process of this audit?

If it's starting from scratch for FY22 and 23 then conceivably it could drag on, but if it's focused by Deloitte on the areas that need restating, and much of FY24's work had already been completed prior to the review's findings, can it be assumed that the restatements from prior year Projects division can be slotted into FY24 accounts without started afresh?

One would assume all other divisions are good to go, already audited with no declared need for restatements, so how long might restating a division the size of Projects, and overall Group finances take, for a 3 year period.

Basically, are we likely looking at something like 1 month or 6 months?

I'm hoping we might get an RNS before suspension guiding to an estimated completion date, but in the meantime does anyone with experience have a best guess?