Member Info for Wiggly

Wood Group can refinance even while restatements are ongoing. Lenders care most about cash generation, liquidity, and transparency. With ~$275m in operating cash flow and covenant waivers secured until April 2025, Wood has both time and flexibility. The restatements are historical and non-cash—meaning refinancing remains entirely feasible, though potentially at a higher cost until accounts are finalized.

To summarize, the most important information is this: Wood's February 14th update, highlighting a ~$275 million improvement in operating cash flow alongside continued negative free cash flow, adds credibility. By presenting both positives and negatives, management demonstrated transparency, reinforcing that the core business generates real cash while legacy liabilities and investments impact free cash flow. The review clarified that, while prior periods' EBITDA and EBIT will be restated, FY24 operating cash flow remains unaffected. The $275 million improvement stems from working capital improvements and better operational cash generation, validating the view that any EBITA restatement likely involves reclassification and judgment, not a performance collapse.

Also, importantly, the review has clarified that while there will be restatements to prior periods' EBITDA and EBIT, operating cash flow for FY24 will remain unaffected, as there is no material impact on historical cash flow generation!!

This strengthens the view that any upcoming EBITDA restatement is likely about reclassification and judgment—not a collapse in performance.

I'm positive Sidara will bid strongly

Despite recent disclosures around accounting judgment and cultural failings in the Projects business, investors should not lose sight of a key fact: Wood delivered a ~$275 million improvement in operating cash flow in FY24, up from a negative $(66) million in FY22.

This isn't a small shift. It's a clear signal that the underlying business is performing—and generating real cash.

While free cash flow remains negative—due to legacy project liabilities, restructuring, and capex—that does not undermine the strength of operating cash generation. On the contrary, it highlights that the core business is now functioning with significantly improved efficiency and working capital discipline.

If EBITA had been overstated to a severe degree, we simply wouldn't be seeing this level of operating cash flow. Cash conversion is one of the most reliable indicators of real earnings—and in this case, it supports the view that the restatement, while material, will be judgment-driven and containable—not a collapse in profitability.

With the Sidara bid still on the table and strategic value intact, the market has oversold short-term risk. The fundamentals remain far stronger than sentiment suggests.

From the FY24 trading update released February 14.

"Continued improvements in operating cash flow, which has improved from $(66) million in FY22 to approximately $275 million in FY24."

Unlike adjusted EBITDA, which can be manipulated with accounting judgments, operating cash flow is much harder to manipulate. If a company says it generated $275 million in cash from operations, that is real money that flowed through the business.

> If there had been a material, fraudulent overstatement of earnings, you would expect to see weak or negative cash conversion. But the opposite is happening.

You don’t get $275 million in operating cash from a business that’s inflating earnings by $100 million+.

That doesn’t mean EBITDA won’t be adjusted downward due to accounting judgment shifts (like reclassifying SHARP/SHIRT costs), but it implies the delta is likely modest—perhaps tens of millions, not hundreds.

I fully expect the offer details to land before the PUSU deadline.

The recent share price dip is in line with broader market weakness—several large caps have taken a 20–25% hit in just the last few days. Wood Group’s decline is clearly market-driven, not company-specific.

We touched 45p pre-business update, but I believe that’s still 25–50% below where the deal will land. I’d consider anything above that a bonus—but realistically, I’m expecting a final offer in the 55–70p range. The value is there, and Sidara knows it.

Sidara remains engaged—a clear sign the Deloitte findings aren't a deal-breaker.

Suspension is procedural.

As a cash buyer, debt terms are irrelevant.

Lower interest rates boost the valuation outlook.

The market is nervous, but Sidara sees value.

Smart money doesn't flinch.

Here us an example at 279%

https://www.businesswire.com/news/home/20211025005815/en/Viston-United-Swiss-AG-Commences-All-Cash-Offer-to-Acquire-Petroteq-Energy-Inc.

It can happen

Light

'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'

If a Rights Issue is required to progress refinancing on good terms, then those that participate will be in the game for the huge upside/recovery that will follow.

I don't think Subject is true. As per FT, Sidara is focused on ensuring key staff remain and to close deal quickly

Those suggesting Sidara may walk away due to the review findings (multiple posters)

This view is illogical, as Sidara performed the same review and is sitting at the negotiation table.

Would suspect the following:

We recommend re-engaging with Wood Group now. Deloitte’s findings confirm the issues are accounting-related, not operational. Waiting longer risks losing strategic advantage and valuation upside.

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Rationale

1. Strategic Fit Holds

Asset-light, global energy services model

Energy transition aligned

No change to cash-generating fundamentals

2. Independent Validation

Deloitte’s review aligns with our due diligence

No fraud, no systemic risk

Confirms our investment thesis

3. Right Time to Move

Wood is suspended: low competition, high leverage

Restated accounts may drive re-rating

Delaying risks higher price or rival interest

4. Downside Protection Available

Conditional offer (e.g., MAC clause)

Deferred/escrow consideration

Targeted indemnities

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Recommendation

Proceed with structured re-engagement. Timing, validation, and strategic fit are aligned—this is our window.

The restatement issues are largely accounting-related, not about operational failure or cash-flow collapse. Sidara likely understood this.

If the underlying cash generation, contracts, and order book looked solid, then the restatements might be seen as "noise" rather than "risk."

Captain

In my view, a further delay does not benefit sidara. It gives WG additional time to sort the books and time for new entrants to join the bidding.

Why would Sidara be surprised by the review findings?

They had direct access to the books for the same time as Deloitte.

Yet they are back at the table.

Hard to keep the head in times like this, but it's important to do so!

Captain

CAPTAIN

I assume the DD performed by Sidara (possibly via Deloitte… if not Deloitte, then one of the other Big Four) uncovered exactly what the Deloitte review has uncovered.

Nothing in the Deloitte review should surprise Sidara.

I suspect the last RNS was stage play and has set the scene for acceptance of a low-ball offer (60p+).

Sidara has to answer the following:

Do the risks of delay outweigh the risks of a formal bid pre-restatement?

IMO, if they can get a bid accepted at 60-100p, I think the answer is yes (the risk of delay is greater).

Also, the initial FT article referenced that Sidara wanted to close this deal quickly to ensure key staff were retained. It is unlikely those key staff will receive any bonuses in 2025 unless under Sidara.

Bottom line

Sidara faces real risks from delaying a bid, especially now that:

They’ve done deep diligence;

They have draft Deloitte findings;

The restatements are mostly about accounting clarity, not underlying business failure.

Unless the restatement uncovers material new liabilities, the delay now mostly benefits others—not Sidara.

A rights issue would resolve all issues and allow WG to prosper going forward. I, for one, would back it with all I could.

For this reason, Sidara will close this deal by April 17.

any experts on pension surpluses?

wood group could access up to $200 million from its ~$392 million pension surplus and still be above the industry average in terms of funding level.

assuming:

current surplus: $392m

withdrawal: $200m

remaining surplus: $192m

unless liabilities change dramatically, this would likely leave the plan still 107–110% funded—above average, and still well within safe territory.

wood group’s pension surplus of ~$392 million is relatively large in both absolute and relative terms compared to many other uk corporate pension schemes. here's how it compares to averages:

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1. surplus in context (absolute terms)

ftse 350 average pension surplus (as of late 2023):

around £50–100 million, depending on company size and sector, according to mercer and lcp pension reports.

wood’s surplus (~$392 million or ~£310 million)

is well above average, placing it in the top quartile of uk corporate schemes by surplus size.

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2. surplus as a % of liabilities (funding ratio)

industry norm:

most mature uk db pension plans are 105–115% funded (i.e., 5–15% surplus).

wood’s plan appears to be funded at around 115–120%, based on the size of the surplus and previous disclosures.

that’s a healthy ratio, indicating strong funding. in fact, companies with surpluses over 110% are typically considering buy-ins or full buyouts, which wood is now exploring.

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3. sector comparison (energy/engineering)

many peers in the engineering and energy sectors (e.g., bab****, rolls-royce, bp) have:

historically large db schemes

surpluses or small deficits