Member Info for lightnotheat

If a "Put Up or Shut Up" (PUSU) deadline falls on a Bank Holiday, the deadline is automatically extended to the next working day under the Takeover Code, as per Rule 2.6(a) and confirmed by the Practice Direction. This applies because the Takeover Panel is considered closed on Bank Holidays, making the next available business day the operative deadline for the bidder to either announce a firm offer or state they will not make one.

What I am not sure of is whether the deadline is extended 24 hours ie to 5pm tomorrow or only until the opening tomorrow.

To be polite, I think that a placing at 60p is very unlikely, although I would concede that we all need to see the Accounts. If management were "minded to accept an offer of 35p" things must have improved a heck of a lot for a 60p placing to be on the cards. Also a placing is limited in what can be raised, but I am sure you are familiar with the placing rules???

Agreed

There is an argument to say that any further bidder will not show its hand until the Accounts have been published which would reduce the amount of due diligence it would have to do.I am not sure what the advantage of showing your hand now is. As you know Apollo also bid for Wood last time round. I think that there is a lot of PE money looking for a home right now and while I certainly think the odds on another bid are less than 50%, I would not rule it out entirely once an alternative bidder has seen the Accounts and Sidara has finally shown its hand so that the additional bidder knows what it is competing against.

I don't think in 40+ years I have ever seen an equity raise at a premium which you imply ICE. Neither of us has seen the Accounts but I would be truly astonished if the share relisted at 60p absent another bid in that vicinity. Given the amount that needs to be raised, in my opinion, of several hundred million (to at least match the Sidara injection if it were to walk away) and based on the market cap at suspension or there abouts you are looking at a massively dilutive rights issue. Even then and with a massive discount to the pre close price, you still have to get institutions to underwrite it and they may chose not to, hence the fall back of a debt for equity swap. I don't know what your experience has been but it does not appear to have been in equity capital markets otherwise you would not be saying what you are about a potential rights issue. Make no mistake, if an equity raising is required, and I think it is if Sidara walks and no one else appears, it will be horrendous.

Ice - yes I am worried about dilution but I think you are super optimistic if you think the solo option does not involve equity. Even before Sidara came along management refused to rule out equity issuance on an investor call which made clear the need to address the capital structure. I do not think that absent Sidara the lenders would agree to anything other than a short term finance programme while Wood issued equity by some means or other. We have not seen the Accounts but I strongly suspect that tangible net asset value will have gone down ie not just goodwill write down. In my opinion this means that the lending needs to be supported by an increase in the equity base.

If you are comfortable with a heavily dilutive rights issue or a debt for equity swap then fine. But I think it is super optimistic to envisage a scenario where Sidara walks, no other bidder emerges and there is no equity issuance. So support the solo option by all means but I think this will come with a heavy equity price tag.

I agree with posts that say today's announcement was a clear positive. As a reminder I am long. An important point was made about W having a fall back position if Sidara's bid fails. Unfortunately, and as a holder, such a fall back position might well involve either a large equity issuance or a debt for equity swap. Both would be very bad for us, particularly the latter.

Not mentioned as far as I can see is the comment that Sidara continues to make excellent progress with its due diligence. This is important as much for what it does not say as what it says. It implies that Sidara has not found nasties that would lead to a reduced bid, it implies that such a message has not been passed to W's Board which had it done so would have had to put it in the RNS.

I said yesterday that sorting out the lenders was the most important thing. That done the remaining risk is that Sidara walks and no new bidder emerges. Unfortunately I am not with those that say this would be fine as W can recover on its own. It might well be able to do so but there would be massive dilution in the short term and I for one could not afford to double or treble my existing commitment to maintain my proportionate holding in the event of what would need to be a deeply discounted heavily diluted rights issue.

Bottom line is that I think that we will be taken out at 35p or more and that would be fine by me!

I see either no offer or 35p+. Sidara must have seen all the nasties. The real question is how much of this is the write down of goodwill and how much will the writedown affect net tangible assets. Goodwill does not matter, NTA does. The write down of NTA determines the size of the hole to be filled. To me it is all about the Balance Sheet not the P&L Account. Repairing the Balance Sheet is key, the rest will follow. It is the supportable level of future debt vs the current debt that counts. Sort that out and we are home and dry. The recent sale was helpful but likely a very small contibution to the repair of the Balance Sheet. I think that the length of the delay so far is about getting the B/S sorted and probably some significant disagreements between Wood's management and the Accountants on the size of the adjustments required. We will of course know more tomorrow.!

It is clear that yesterday's announcement was a positive for the balance sheet, a negative for the ongoing P&L and, because the B/S is more important at this stage than the P&L, an overall positive for the bid value. They key is the agreement with the lenders; no agreement and we are wiped out an agreement not involving a debt for equity swap then I think we are looking at a bid price of 35p but hopefully more. Very difficult to pontificate on value without knowing the details of the Accounts. To repeat what I have said several times, Sidara should know all the nasties, it has had multiple opportunities to either walk away or reduce its offer and I believe is unlikely to be able to use the publication of the Accounts as a pretext for doing so.

In summary, I still hope to be taken out at 35p or more.

The existing debt is far too high for the current level of profitability to service. It is nothing to do with the market cap of Wood or what it was and now is it is simply a question of debt servicing capacity based on earnings. The last think we want is a debt for equity swap and second last thing we want is a rights issue, period.

Given that Sidara has stayed the course so far and must know all the nasties by now but have never suggested reducing their offer price - and I think will not be able to use the publication of Accounts as a pre-text for this, then I would assume/hope that 35p is a base case offer.

From a quick read of today's disposal announcement, while it is positive in taking a small amount of pressure off the balance sheet it is negative for longer term earnings as the savings on debt interest are unlikely to match the loss of earnings post the sale.

I too am fed up with extensions and feel it is time to put up or shut up; that said I do not want Sidara walking away as I am afraid that we might get stuffed with either a massive debt for equity swap or less likely a massively dilutive right issue. I think a rights issue is unlikely as it would need to underwritten and frankly the institutions are unlikely to do this even at a significant discount to the 18p pre suspension price. So it is a higher offer from Sidara or another bidder which is my preference.

I hope that this will be the last extension on this deal. The positive spin is that, up until the suspension of the shares, we had no RNS announcements indicating further current difficulties with the company, no evidence that lenders are about to pull the plug - and why would they want to create such a mess - no indication by Sidara either that it is walking or planning to lower its bid. It should have been in possession of all relevant information for a while now and so cannot say that it has been blindsided and therefore wants to reduce its indicative offer. The fact that it has stayed the course so far indicates a strong genuine interest in acquiring Wood. Business continues to be won, including some pretty large contracts which must be of comfort to lenders.

There is also a chance of a counterbid. There is no point in bidders showing their hands until the Accounts have been published and Sidara has either put up or shut up. They want the Accountants to in effect do the due diligence for them.

The main flies in the ointment is the potential for major disagreements over the size of the required adjustments and also the risk of a going conern qualification if the funding does not get sorted.

While I have never been anywhere as bullish as @Ice on Wood or its long term prospects, I still believe that it will survive as an entity and that it will likely be sold at 35p or higher.

@Ice - I take the point that I should have said that "it is likely that major institutions were consulted" rather than they were consulted. It would however be very strange if they had not been. Of course we do not know what happened and what was said.

I think the low turnout as a % of votes at the AGM doesn't really say anything much. The AGM was a non event with a very narrow agenda. I am not sure what a normal turnout is but it is probably less than 50% of shareholders by number rather than value.

Neither of us know why it is taking so long but agreeing with lenders and publication of Accounts might be two reasons. I worry about the former as the lender might be insisting on more money being put in which would be bad for the offer price. I think silence is probably becasue there is not much to say given the key information on the Accounts is not available, so it would be difficult to say anything constructive or informed.

What I am surprised about is how long the Accounts are taking. This has been going on for a long time and one assumes that a lot of resource has been thrown at it. A possible cause for delay is the inability to agree between management and auditors on some of the judgements made. That again would be a worry given management's track record.

I don't significanly disagree with you - we are all in the dark together!

Not sure that I agree with @Ice that the deal would already be done if 35p was agreed with institutions. For one thing institutions were consulted before the Board indicated that it was minded to accept 35p. I accept that things have changed and contracts have been won, although on the other hand we do not know the state of the Accounts. This accepted I might still hope for a little more than 35p and/or a counter bidder.

Sidara was never going to bid until the Accounts are published and would have been advised not to do so. For that reason I do not believe that the delay is due to institutions not agreeing the deal... they might not but it would be wrong to say this with certainty.

The main comfort to me on the 35p is that Sidara must pretty much know all the relevant information by now aside from having the formalised Accounts. They have had many many opportunities to eithe withdraw from the process or lower their offer. I therefore very much doubt that they will be able to claim new information form the Accounts as a basis for lowering their bid. So on this basis I agree with @Ice on one thing, and that is that 35p would appear to be a cheap price and given the action or rather non action by Sidara, I think they know this too.

You will have noticed that unlike before, the waiver extensions and PSU extensions are not coterminus.

Sidara has had every chance to change its bid and has not done so. Hopefully this means that 35p will be the minimum offer.

I agree and think Sidara will stay the course.

Wood has now completed its planned debt refinancing exercise - as a result, its principal facilities now comprise:

$600m Transition Export Development Guarantee facility maturing in July 2026

$1.2bn RCF maturing in October 2026

c$880m of US private placement loan notes maturing at various dates between 2021-2031 (of which only c$300m is due before 2026)

Sidara has had many chances to withdraw in the face of negative news but has not taken any of them. That must count for something.

Not sure about the debt repayments this year. As I (possibly wrongly) recall, the refinancing point was October 2026 not this year. Please correct if you have evidence to the contrary.

@Ice Cool. While I think that the absence of the lenders waivers is certainly unhelpful, I am clinging on to the belief that lenders will take a positive view of the recent large contract wins and that they will not want to force Wood into a messy administration. That said, I have always been somewhat concerened that the funding gap was larger than the amount offered by Sidara. However, the latter has now stuck with its conditional offer through all sorts of negative news and so one must assume that it remains very interested in Wood. The absence of a spillover (so far at least) from the Iran bombing - which given that global politics was the reason behind Sidara's last bid withdrawal - is also a positive. You have always been more bullish on Wood's prospects than me but I still hope that we will get at least 35p from Sidara. It must know of all the skeletons by now and has still not moved to reduce its offer. It will be a bit disingenious if it uses the publication of Wood's Accounts as a pretext for this as it must by now know all the relevatn information necessary to make a decision. The FCA probe is of course new and with that comes the prospect of a financial penalty on Wood but given the latter's own actions to investigate the mess, I would have thought that any fine will be manageable and not that material to the outcome of the bid.

What we have not had is any disposals to boost the cash flow, but that is not that surprising in the midst of a bid when the bidder might want some of the asssets put out for sale.

So I hope we get our bid and better still a counter offer; as others have pointed out a solution which involves a massive debt for equity swap will wipe us all out.