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Actually, Sidara may have to pay quite a lot

This $450 mn seems to be needed urgently. But the requirement for further cash injection can continue

Wood previously announce they would burn $200 mn in 2025. Obviously, now it will be a lot more than that. Revenue will drop, costs will increase

And then Sidara may need to pay something to the lenders to calm they down

The use of the injected cash is an interesting one...

If it is needed to partially repay the existing debt, as the lenders may require, it is one thing

If it is cash needed pretty much immediately to avoid insolvency, then it is a completely different matter

I personally think it is the latter

Obviously, this is just a speculation but it could the case that it was Sidara that insisted on BOD’s publicly announcing their willingness to recommend a 35p offer

Just to make sure the board is serious to proceed

If that was the case, it implies Sidara is really interested to get it to completion

And the only thing which can let it down is a higher competing bid

Both are then obviously positive news

Icecool is dumb as wood. Just impossible to read this nonsense

Cash flow positive company with good prospects and no significant issues, lol

One good thing about him - at least he doesnt shout the bid values the company at 85p. That would be too much to handle

BoardedDragon, during my 20 years career of an M&A banker I’ve seen so many cases when clients refused decent offers from serious prospective buyers only to sell at a fraction of what was originally proposed a couple of years later. And that was when they were lucky, because in a number of cases the target businesses just went bust

So this whole Wood saga is pretty common actually

All of a sudden, 35p is a great proposition

Luca, sorry to hear that. Best of luck, mate

Carrot, consultancy is a very fragile business

The first serious issue and clients and top employees will run away pretty much immediately. It is like a downward spiral

You simply cant afford defaulting even on unsecured debt, it is game over pretty much instantly

Carrot, if the board put “We are sinking, SOS!” in black and white rather than between the lines yesterday, would it help to realize how dire the situation is?

Ninety One sold 3.7 mn shares at 28p yesterday. Are they nuts? Easy 30% profit, to say the least, lol

A bidding war is coming!

Eddyates, thanks for the article, interesting

It is funny enough that Sidara may face the same issues having acquired Wood that Wood had faced having acquired Foster Wheeler

It may be too difficult to swallow

Back in 2007-2008, I used to work in a large emerging markets investment bank

Its investment banking division booked record revenues on both tears. We were busy like hell working 100+ hour weeks most of the time

Still, the bank almost collapsed in late 2008 despite the fact that it was not involved in all that CDO type of high leverage business. It was mostly a fee based advisory type of business

They foubd an outside investor who injected $500 mn for a 49% stake. It seemed a bargain because in early 2007 bank’s shareholders declined a $3.5 bn offer from its larger competitor

Tev years later the bank (or rather its leftovers) were sold to management for ca. $10 mn

That particular investor had altogether invested almost $1.0 bn onjecting cash again and again on a hope things will become as they were before

That was a great lesson for me

Luca, so what are your friends at Wood thinking about the proposed deal? Are they also shareholders?

Luca, a few friends of mine worked in Arthur Andersen 25 years ago. They all were busy back then

Wood may not be in that bad a situation yet but it is similar. At least AA did not have significant debt they defaulted on like Wood has done

It is always funny to see how a bunch of idiots who failed on every single statement they l made try to save their broken ego by attacking others

Luca, I am always respectful to people who discuss the company, the stock and the developments, not me

I am pretty confident there is a significant exodus of clients, projects and top performing employees from Wood as we speak

It will be lucky if its revenue is $4.0-4.5 bn this year. And there will be a negative FCF of $300-500 mn for sure

Gogaget, it is a reasonably good deal for shareholders because the only real alternative here is to go bust really quickly

Stop dreaming about a great company Wood once had been. It is a complete mess. Sidara in a way is a white knight saving it. Acting in its own interests if course

Apparently, the market does not believe in the deal with Sidara and we may well see some further drop in the share price in the next three days

Why does the market ignore yesterday’s news?

1) Sidara may not be actually interested to offer 35p

2) Wood shareholders would not approve the deal

3) Wood not able to fulfill conditions precedent

4) Anything else?

40% premium obviously