Member Info for SG2025

Also, for those making strong statements about strong fundamentals, please look at the balance sheet. If you remove intangibles, net asset value of the company is -ve!! Food for thought.

Mostly concur with you @bandit1.

I very much doubt it will go anywhere close to 100p. We are talking of over 200% premium from current price and almost 400% premium to the undisturbed price. I know people are hysterical and in their own dreamy bubbles on this forum and wouldn't want to talk anything less than a rosy/beautiful scenario, and shut me down like everyone else who dared to say contrarian views. But still, being a holder, I believe in preparing for the worse and hoping for the best. Does anyone on this platform know the maximum M&A premium ever paid in the UK or Europe? I would also remind everyone of a similar distressed situation with a well-known brand which went take private - AA Plc. Look at the premium paid on that. I know there are differences etc, but if it was really so obvious about the price etc, a lot of hedge funds would be jumping all over it and all the short sellers would have covered their shorts. But of course they are not as smart as the collective smartness on this group. FYI - I have a small / decent position just to ride a possible take private, if not, I would hopefully still make decent profit, though lesser than as is.

Btw, I have been enjoying reading the forum for the last few days, particularly a number of predictions from people who have no understanding what a due diligence in an M&A entails and how M&A negotiations really works, but keep making bold predictions about what Sidara will do. I quite like a few sensible posts (which are hard to come by) that talk about alternative scenarios - hopefully more will come and I will be on the lookout for those. For the rest, pls do keep entertaining.

There is roughly 4.5% short base, which equates to roughly 35m shares (~700m shares o/s) as per shorttracker as of 19th Feb. More than 78m shares traded today on LSE alone today. Thumb of rule is that there is equivalent number of shares that trade on OTC. So say, ball-park 150m shares traded today overall. How do we know the shorts were not already substantially covered today? People seem very confident about it, so just wanted to put out there.

Separately, a few posts seem to imply that Wood Group BoD rejected the 230p bid previously - pls read the actual RNS - it was Sidara that walked away after their due diligence, as is what happened with Apollo.

I agree with most posts, that a bid may likely come between 50 - 100p. Sidara will want to minimise the price as with any rational buyer and particularly a frugal Middle Easter company (not maximise), and Wood would want to maximise it. Unless Apollo also comes back in play, Sidara seems to be the only credible party here and they will play hard ball with the management on that account. No reason not to. It may be a cheap buy for them, but again no reason not to try to get it cheaper!! no?

Not as much, but just sold at 35 for over 50% profit over a week!!

Embattled Wood Group enters takeover talks with UAE’s Sidara

Middle Eastern company has made a fresh approach after walking away from offer last year

Wood Group, the embattled oil services and engineering company that was once the big homegrown success story of the UK North Sea, has entered talks with Sidara about a potential takeover by the United Arab Emirates-based company.

Sidara, which walked away from an earlier takeover attempt in August last year, has made a fresh approach following the collapse in Wood’s share price in recent weeks, according to two people close to the discussions.

The talks were ongoing on Monday morning but it is possible no deal will be concluded, the people said.

Wood’s shares rose 12 per cent on Monday after the Financial Times reported Sidara’s interest.

The increase to the group’s market capitalisation to just over £200mn is still only a fraction of the approximately £1.6bn Sidara had offered less than a year ago.

The shares have plunged more than 50 per cent this year amid questions over the Aberdeen-based operator’s governance and heavy debt load.

Sidara, a privately held network of engineering and design companies run from the UAE, was keen to move quickly to ensure it could retain senior and mid-ranking Wood staff who have been angered by the company’s plight and its decision to cut bonuses, according to the people with knowledge of the talks. The people did not disclose the terms of a potential deal.

A spokesperson for Wood declined to comment. Sidara did not immediately respond to a request for comment.

What happened. Why is the stock up 43% all of a sudden? Wow!!!

Placement will only get them to less than 20% of market cap, so its not practical. Only rights issue is the right instrument for the amount of capital speculated to be raised. I would disregard straight placement or an accelerated bookbuild

@Stompy, I didn't the question on business cycle. Can you repeat / elaborate it.

Its no where close to 0.3 - 0.4 EBITDA. Valuation metrics is EV / EBITDA and not market cap to EBITDA. EV/EBITDA is more than 3x - still cheaper only if you ignore the context.

As a subject matter expert, its more nuanced for each company than just plain vanilla. There is a question on accountant's working capital report for investment banks, 135 days rule on accounts / financials going stale etc for inclusion in prospectus, FCA review of a prospectus / risk statements etc. All this means that they will need 1-2 months just after the Deloitte's work is finished. They may be working in parallel, but there are still substantial work to finish after Deloitte's work, at which point BoD will be legally liable to publish the outcome from the review itself.

Thanks @Icecool for a detailed response. Glad to see we agree one some points, but also differ on some. Anyhow, I agree to disagree. My only rebuttal is nothing is impossible, not a rights issue or a new refi, but the question again would be if there are more costs to a refi, it will mean that the guidance for a positive 2026 cash flow will again move further to 2027!! The analysis and objective for a lender is very different to an equity shareholder. If lenders see an opportunity be is historical (in retrospective breach) or distressed situation, they will demand more returns / interest rates for higher perceived risks regardless of what it means for equity shareholders. Anyhow, you seem certain of current management guidance, while I am circumspect and have no idea how they will deliver or not. One more thought for process, while the company has $6bn in pipeline, that's only worth about a year's revenue or $400-450m in adjusted Ebitda as per their margins. This is not very high for this sector btw. Not saying its low, but not very high either compared to best standards in the sector.

@Stumpy, It takes about circa 1 month from launch of Rights issue to completion (about 2-3 weeks of notice period for EGM and 2 weeks of rights subscription). During this time, share price normally depresses in more than 9 out of 10 times, due to a number of factors. I can not do a full teach-in on rights issues here, but you can look at any of the last 5 rights issues raised in UK or continent Europe. Its a well documented fact and any investment banker or corporate finance specialist can tell you. Theoretically, yes market cap should increase by cash raised, but it is not always the same, unless the capital raised is growth capital and changes the conviction on the underlying investment thesis. Current issue with Wood Group is somewhat about medium term cash flow management, but more fundamentally about repetitive failure of management guidance and delivery of what they promise each time. Until the business turns fundamentally and starts to generate a sustainable cash flow, I don't think rights issue itself solves a lot to warrant substantial recovery of share price. More so, understand this, there will be more shares o/s and any recovery will be further divided between more shares and therefore reducing % upside as much it reduces % downside.

@Hosai, to your point. Can you define cheap valuation? Looking at only P/E is a fallacy. Analysts and markets use several metrics to justify their valuation arguments. When there are cash flow / debt issues with a company, markets tend to ignore P/E and instead looks at EV/EBITDA, FCF yield and more so on DCF valuation, which as per analyst models are not very encouraging. This may change clearly with any recovery in business.

I may have painted a bit downbeat picture above, but I should also say, among the positive catalyts, there are still chances of substantial upside, if any of the following pans out in the near to medium term:

1) Emergence of an activist investor or a takeover bid

2) Management can convince the street in their FY results that they can absolutely manage without a new equity raise - a rights issue will be catastrophic honestly for shareholders.

3) Deloitte review comes out better than expected.

4) Positive surprise in business / expected cash flow profile

@Icecool & @Ryan, I couldn't help but post, reading your rants both side of the pond. Couple of questions (FYI, I am a dip buyer btw last week, so hold a small punt)

1) Past account restatements have no impact on current cash statements, but has anyone considered if previous statements are revised, company may become in breach of covenants historically otherwise (in retrospect). How would lenders consider that? Any precedent? Surely company would have some form of liability based on that to lenders?

2) Debt refi's do not happen at the last minute (I am telling you as a professional with almost 2 decades of banking experience in IB), so Icecool your arguments are far from actual market practice. Has anyone considered that any refi this year may come at a higher cost than historical (given more distressful situation now with -ve cash flow vs before, and higher rates vs 3-5 years back). This would surely have more -ve impact on cash flows - more in 2026 than this year?

3) I have gone through historical results and management presentations - they have claimed since 2022 (you can see their investor presentation and subsequent ones) that the company will turn cash flow positive from 2024, which moved to 2025 and now to 2026. Beyond management's words (which have been repeatedly incorrect), what evidence does anyone have to say CF will be positive from 2026?

4) I can see a sense of raising a fresh equity via Rights issue (but it will be sizeable vs current cap) - see precedents of Capita, Asos, and more recently Synthomer. Ideally they should be raising it with their FY results in March, but they cant do that before completion of Deloitte's work, after that they would need at least a month or two to get prospectus done etc. If they are indeed to do a new rights issue, the earliest feasible is with their HY results at the most earliest, followed or concurrent with a debt refi deal. I am sure this is what their advisors will be advocating. However, no one is stopping the company from making an announcement or indicating a potential rights issue along with their FY results, unless clearly they have better visibility. This has pros and cons from company's perspective, but not recommended if the company is not sure.

5) Hostile takeover or activist shareholder - possible, but common sense say, its very unlikely before the completion of Deloitte's review. Also, if the company will do a rights issue, shares will depress further at that time, and makes more sense to wait for a better opportunity. Also, from a takeover perspective, there is relatively little value looking at market cap now, when the debt forms such a significant portion in the enterprise value.

I can go on and on further on several other topics, including seemingly cheap valuation - but I think this should be enough to stimulate thoughts. I am not trying to push the stock down, and these have been well covered in analyst reports btw. but keen to understand other genuine / unbiased perspect

For full disclosure, I too bought on the CEO exit news, and sold out today :).

Https://igamingbusiness.com/strategy/management/corvex-calls-changes-entain-after-taking-stake/

The same firm bought 4.4% stake in December 2023, pushed for the CEO exit. Shares went up from about 800p to 1000p in 2-3 months, but then went downhill to below 6 by mid of 2024. These guys made a smart exit on the pop. So beware they are a smart hedge fund, only for a small game, not necessarily like Elliot etc to bring substantial value increase.

Good momentum in the stock, which should continue with more +ve news on US-Russia talks, but there will be hiccups and arm twistings on the way, which will mean shares will remain quite volatile. If there is any negative outcome from the talks (hopefully not), shares may see a sharp dive. Anyhow good luck to the holders. I have a feeling there may be a repat of strategy, barclays shares reminded today - "Buy the rumors, sell the news".

Definitely positive given a stated and recognised provision which is on the lower end of the street estimates. It will be important how the company communicates their assumptions and whether analysts consider those reasonable enough. On the downside however, the central costs (28m) imply an ongoing substantial expenses on legal, and other advisory costs related to motor finance case - hopefully one-offs that will come off by the end of FY25.

Does anyone on this forum know how much is the retail trading volume on this script or any other FTSE 350 stock on LSE? If anyone on this forum thinks, that someone is posting biased views on this forum to prompt others to buy or sell which will really move the prices materially either way, then they must be doping or fully disillusioned. I have worked at bulge bracket banks for two decades and can tell you from my experience on their dealing desk, that the retail investors have little to no influence on the share price movement of any FTSE 350 stock in terms of volume of trading. I use this forum to get any news / info that I may have missed as large professional investors clearly have better access to news/information/research analysts on the go, and by the time I came across relevant news piece shares have already moved materially. I am a new member on this forum, but couldn't stop posting this as a lot of posts are quite ridiculous, but some v helpful too. I have sold out of Wizz and still don't buy the sentiment and hope-driven rally. I may very well be wrong or proven right over time. Will I buy again on this script, perhaps when I think the onscreen price is right, or something fundamentally has changed. Again I may be right or wrong as much as any bull on this forum with an existing holding.