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I think that Wood will go for a maximum of £600m.

No one has answered my question. Perhaps I can reframe it and ask what is Wood worth without a bid and with a refinancing that will inevitably also require equity to get the loan covenants back into a reasonable place. I have worked in the markets for decades and do not accept that the market is that far out in its evaluation of a possible bid price. Probably not worth wasting more time on this. Time will tell

I am afraid that I am hugely skeptical of some of the suggested bid prices. In every bid case there is a premium to the undisturbed price ie what the share price was before the news of a bid emerged. Those suggesting a three figure offer are implying a premium of about 3x the undisturbed price. If someone can come up with a single example where an offeror has paid this or even a price double the undisturbed price then I would be very interested to hear it.

Those hoping for a three figure bid reference the last bid made by Sidara and argue not that much has changed in the Company's fundamentals, whereas I believe that the amount of future cash flow that might have been expected from the order book has declined as a result of the write downs. All Wood have every said is that ability to generate cash has not been affected. These are two different things.

Also those arguing for three figure bids ignore the fact that recent market turmoil has seriously impacted valuations. If one doesn't understand this simple issue then one should not be posting on this board. Finally the market is not always right but it is very very rarely as wrong as would be the case if a three figure bid emerges. The only reasons why the share price is at this level are (i) the potential for no bid at all (ii) related to (i) no extension requested or granted on 17th April when the current extension expires (iii) the potential for a massive dilutive equity issuance or debt for equity swap as part of any refinancing. I stick to a maximum bid range of 50-70p mentioned before. This still leave significant upside from here. I think if an extension is granted on 17th April it would be a big buy signal but would not touch the shares above 22p otherwise.

Yes, I have said quite often now that the biggest risk is of either a deep discounted rights issue or worse still a debt for equity swap. I am hoping that a bid from Sidara will mean that this is not required. In any case I have been very clear for a while now that I strongly believe that lenders will want more equity in the business as a condition of refinancing

If you think that there will be no extension by Sidara then obviously you sell before the 17th. If there is an extension agreed it would be foolish to see unless you absolutely had to.

Personally I do not think Sidara will walk away. They want the business and they can acquire it at a big discount to their previous offer. That said I have another situation where an indicative bid has been made and management have said that if a firm bid is made they would be minded to accept it. Deadline in third week in April. Yesterday the price of the target fell 6% and is now trading 12% below what in effect an agreed bit if made. What I am saying is that the economics of all bids have changed for the worse and unless there are signs in the next couple of weeks of a change in the tariff battle then offer prices will come down from what they might have previously been. Even if you argue that Wood is not being purchased on a three week view any acquirer now will want a discount for the uncertainty. That is simply common sense.

Hopefully neither us will see the share price down at 20p but the one biggy out there is that I believe (with no inside knowledge ) that the lenders are going to want to see more equity in the business as part of the refinancing agreement given what has happened to the balance sheet/covenants and especially so if Sidara withdraws. I know that normally management would not dare to contemplate an equity issue at current levels and there is a question whether it could even be underwritten but still a 2 or 3 for 1 at say 20p still might be on the cards. Personally I would probably buy that but the massive dilution would significantly delay share price recovery.

I agree. I also have no issue with the shares being suspended so long as they get the Accounts finalised within the required period to avoid delisting, which they will do of course. However before the suspension date we must have an extension by Sidara (or a bid which seems very unlikely). No extension would only happen if Sidara withdraw or are offering a ridiculously low price. I think Sidara are very serious about acquiring Wood so hopefully we will get another extension. If I am wrong the price will be 20p tops in the short term.

Key date is 17th April. Further extension agreed by Sidara would be a huge positive even though the shares seem highly likely to be suspended. I think we all know what will happen if there is no further extension... a very long and patient wait to get our money back!

"The Company does not currently expect any material impact from the Review on the Group's ability to generate cash in the future".

Direct quote from the last statement. This is NOT the same as saying that the AMOUNT of cash that was expected to be generated is unchanged. In any event that is how I read it.

Of course I would like you to be right and me to be wrong! If you read the statements it is all about the ABILITY to generate cash in the future remaining unaffected. Nowhere does it state that the AMOUNT of cash to be generated in the future remains unaffected. That is the crucial distinction. The projects now being written down were being carried on the balance sheet at an inflated value. Because of the way that the projects are accounted for in revenue terms, I believe that no revenue had been taken into Wood's figures as the projects had not reached the point where this happens. However there was clearly an expectation that future revenue was to be earned from the projects, otherwise what were they on the balance sheet for. The fact that they are now being written down does not change anything. You ultimately had a stream of revenue attached to those written down projects which was expected to be received at some stage in the future. That is not now going to happen; hence the valuation which is based on the present value of total cash flows has been negatively impacted. As I say I hope you are right and I am wrong, I would not care a bit, indeed I would be ecstatic!

Wood will survive, but frankly anyone looking at a 3 figure take out price is deluded. The future cash flow may not be affected in terms of ability to generate it but the amount certainly will be after they shave a couple of billion off the order book - why so much? well the covenants do not get breached without a very hefty write down.

There is decades of M&A history and nowhere do I recall a bid price being 400% higher than the undisturbed price on the day before Sidara announced its interest. Wood is not in a M&A world of its own. If we get 60p that will be a miracle and all I need to make me happy.

I have consistently said that a price of 50p-60p is the best we can expect. Obviously I hope that I am wrong but referencing the historic price a year or more ago as a benchmark for a bid is very unrealistic. Some sort of premium to the undisturbed price prior to the bid is more likely. Unfortunately this may mean that even the lower end of the above range may not be achieved..and yes I am long!

Perhaps I am missing something but for WG to have breached its historic covenants considering where the company was in relation to its covenants prior to the review (See audited 2023 Accounts), I think you can probably add an 0 to your £100m figure or perhaps more. Have you looked at the covenant headroom and what it would require for them to have been breeched??

For those that have not seen my previous posts I am long Wood but believe that any bid will be unlikely to be more than 50/60p. Unfortunately I think that it is highly unlikely that Sidara will make an unconditional bid before the 17th April and they are unlikely to make a conditional one subject to no further nasties on the publication of the accounts. If Sidara do not bid then the maximum share price is going to be under 20p and could be zero if their is either a massive debt for equity swap or a massively dilutive deep discounted rights issue. Management was given an opportunity to rule out an equity raising on the last investor call and this is what I fret about most.

I think Sidara will bid at the end of the day, given (a) they were clearly desperate to buy Wood before (b) the problems seem to be largely confined to one division and (c) they will not have to pay much for it. Having come this far and knowing what they know I think for Sidara it is down to price not whether they will bid.

I hope I am right!

See below. I think that the revenue had not been recognised therefore no adjustment to historic cash flow but this does not mean that Wood has not lost future revenue that it might have expected, hence the present value of the company has declined which is what the share price is (at least partially) telling us

Revenue recognition in project accounting is based on when a client should pay, whether upfront, in the middle of the project or when the final deliverable is complete. There are several methods of project accounting revenue recognition, the most common listed below:

ProjectManager

Percentage of completion method: Revenue, expenses, and gross profit are recognized each period based on the percentage of work completed or costs incurred.

2

Completed contract method: The system accumulates expenses as work-in-progress and converts them back to cost of goods sold when the project is complete.

1

Time and material billing method: Revenue is recognized during invoicing.

1

3 Sources

I think the only way you can square that is that revenue is not accrued on contracts until they are actually operational or have progressed so far. If you are carrying a project on your balance sheet you must expect it to generate cash/revenue at some stage in the future but that does not mean that you accrue the revenue as soon as you have booked the contract.

This is what I worry about too. However so long as Sidara can be convinced that the problems have been capped then they would be picking up a world wide franchise for a song. I do however fret about the need/requirement by lenders to raise equity which absent a bid would indeed be potentially catastrophic

I must be missing something. While I accept that the problems are historic and are/have been dealt with, surely Wood has lost some actual value (not share price) since the review started. There must have been contracts on the balance sheet at a grossly inflated value and while no revenue/cash on them had been taken into account so far, there must have been an assumption that these contracts would generate a revenue stream in the future. So I repeat what I said earlier, while the company's ABILITY to generate cash may well not have been impacted, the AMOUNT of cash/revenue that it might have expected to receive over time has surely gone down. All the Company's statements talk about "ability" not quantum. And while if you are prepared to believe management then cash flow will be positive in 2026, this does not alter anything. As I am sure everyone knows, the value of a company is the present value of future cash flows. Assuming no changes to discount rates then the PV of Wood's future cash flow has surely fallen. This is why referencing a bid at anywhere near the last offer by Sidara makes no sense. I have no crystal ball but unless the market views the probability of a bid as vanishingly small, hence the depressed share price, then I see no way that a bid at more than 2 or so times to the current share price is likely. Wood is in a weak negotiating position and while I accept that the lenders will be reluctant to pull the plug, there will still be a desire for an equity injection given the downward revision to net worth. I remain long but do not share the aggressive share price targets. The market is not that wrong however much we may wish it were.

Good morning @Icecool. I wonder if you have been looking at the implications of the breach of the lending covenants. In the 2023 Accounts the reported net debt to adjusted ebitda was 2.08x vs a covenant of a maximum of 3.5x. For this covenant to have now been breached as per yesterday's statement and given that net debt will not really have changed, then adjusted ebitda must have more or less halved, depending on the size of the breach.

Also you will have note that the statement says that historic cash flow has not been affected and that the adjustments do not affect the ABILITY to generate cash in the future. It seems to me that revenue on the contracts at issue had not begun to accrue; however it also would appear that the value of the order book will be massively written down therefore hitting the QUANTITY of future cash generation. If I am correct - and I am not an accountant so I might not be - then I think that Wood have not been totally frank in disclosing at least the fact that future amounts of cash flow will be negatively impacted or that the reported order book will be heavily written down. I think that this reflects the very low share price and says volumes about the company's solo prospects if this is where the price is now even with a possible bid. Like you, I hope one comes but if and when it does it is unlikely to be above the 50-70p range max in my view.

Sorry Ice Cool, I am long but not as positive as you. The lenders have given a temporary waiver only of covenants, the order book is probably billions less than previously stated. I still think that Sidara will bid because Wood is a very cheap option for them but they will not overpay ie 50-70p IMO max. My main concern is the prospect of a very dilutive equity hit...you remember all that time ago that management refused to rule this out. If Sidara takes the funding on then the price offered will be low but that would still be a better alternative for equity holders. So I am on your side but not at your bid level!