Just looked over weekend chat - classic from Denziiil3 Mar 2025 12:46
So good, no apology for reposting now.
I am really happy to run you through the debt, and
the genuine answer you are looking for as to the refinancing of their 1.4 billion debt as mentioned in the RNS.
I assume you mean $1.4B?
So, the first thing to clarify is in fact your debt number, and I am going to take you to the recent set of results released on the 20th August 24.
There were exceptional cash outflows of $125 million, of which c.$50 million relate to the Simplification programme to deliver around $60 million of savings from 2025.
However, significant improvements were made in adjusted operating cash flow, generating $51 million in the period despite the typical first half working capital outflow in the business. The expectation is for adjusted operating cash flow to be stronger in the second half.
Reasonably the company is now demonstrating that 2025 borroms the curve with regards to negative cashflow.
And with regards to net debt, Net debt at 31 December 2024 is expected to be at a similar level to 31 December 2023 after the proceeds from planned disposals, which are due to complete in the second half of this year.
And so net debt on a journey to stabilise.
Now to the headline debt.
The majority of the Group's debt facilities mature in October 2026.
Closing net debt at 30 June 2024 including leases was $1,264.1 million
But if we park the leases, as they are not technically debt, as are only apportioned to debt for accounting puposes, the group Closing net debt excluding leases as at 30 June 2024 was $876.1 million (December 2024: $693.5 million
So we have $693M net debt.
Which converted to real money is £540M.
And In total, the Group had undrawn facilities of $686.8 million. Which means plenty of borrowing runway. So no chance of going tits up in the near to mid term.
There seems to have been much panic about the headline debt, and if the company were to struggle to bring to heel the turnaround plan in a timely manner, (the company has positioned 2026 for positive cashflow), then a very easy option, as mooted by the FT woild be to dispose of one of the divisions. Perhaps the consulting arm that would in itself cover more than the debt of the company, bar the leases.
There would of course be an impact on selling a profitable arm of the company, and again, happy to help you with this.
Impact of Selling Wood Group’s Consulting Arm
• Current Total Adjusted EBITDA (FY24): $450M
• Consulting Division EBITDA: $85M
• Remaining EBITDA After Sale:
450M - 85M = $365M
And so, does the company have a debt problem. No, at least not a significant one that cannot be easily dealt with.
Would a smaller company with little to no debt, positive cash incoming, and an ebitda of $365/ £290M (real money), be valued correctly at the mcap where we are today?
£254M.
No, not at all, and give it 12 months, if we are still here, it will not be.
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