Wood Sells 50 Pct Stake in RWG to Siemens

Siemens Energy Global GmbH & Co. KG has agreed to buy the 50 percent ownership of JWG Investments Ltd., a subsidiary of John Wood Group PLC, in RWG Ltd. for $135 million.

RWG offers repair and overhaul services for industrial aeroderivative gas turbines in the global oil and gas, power generation and marine propulsion industries.

Siemens will become the sole owner upon completion of the cash transaction, expected to be completed late 2025 or early 2026 subject to regulatory clearances, according to a joint statement by the transaction parties.

The sale is part of Wood’s target $150-200 million disposal proceeds from non-core businesses this year. The divestments aim to soften the impact of a negative free cash flow in 2025.

“Proceeds [from the RWG stake sale] will be used by Wood to reduce net debt”, the statement said.

Last April Wood sold Kelchner Inc., its civil construction services business in the United States, for net cash proceeds of about $30 million.

Last year Wood entered into agreements to sell CEC Controls Company Inc. and its 51 percent stake in EthosEnergy Ltd.

Wood, an Aberdeen, Scotland-based engineering and consulting firm serving the energy and materials markets, itself is in the process of a potential acquisition by Emirati engineering and consulting firm Sidara.

Proposed Refinancing

On Monday, Wood said it has reached a “commercial alignment on the headline terms” of a proposed refinancing with lenders, bringing it closer to fulfilling conditions for Sidara to make an offer.

The proposed refinancing involves extending Wood’s committed debt facilities to October 2028 and entering into new committed bonding facilities.

“Although the company has been in discussions with substantially all of its committed lenders, not all lenders have engaged with the company in relation to the proposed refinancing”, Wood said in a statement. “The company is working to secure support from all lenders but, absent such agreement, it is expected that the proposed refinancing would be implemented in part via a Scottish scheme of arrangement of John Wood Group Holdings Limited (the ‘Creditor Scheme’). 

“The Creditor Scheme must be approved by a majority in number and 75 percent by value of committed lenders present and voting at the creditor meetings, which is expected to be achieved based on discussions to date with the lenders”.

Wood added, “There is also commercial alignment on the headline terms of a stable platform arrangement with a shorter tenor extension which would take effect under the creditor scheme if the possible offer did not proceed and would provide a basis for Wood to develop and implement an alternative refinancing option, which would also be subject to the creditor scheme”.

Trading Suspension

Wood also said it continues to prepare its results for 2024. Publication of the results is another condition for Sidara to make an offer.

Last March Wood said it had received the draft of a review it commissioned from Deloitte for its January-June 2024 results. The independent review concerned exceptional contract write-offs relating to an exit from lump-sum turnkey and large-scale engineering, procurement and construction works.

Wood has been temporarily suspended from the London Stock Exchange since May 1 pending the release of 2024 financial results.

In a statement March 31 announcing the receipt of the draft of Deloitte’s review, Wood said, “Wood has identified material weaknesses and failures in the group’s financial culture within the Projects business unit and engagement between Group Finance and Projects. These included inappropriate management pressure and override to maintain previously reported positions, including through unsupported dispensations, and over-optimism and/or lack of evidence in respect of accounting judgments”.

“The cultural failings appear to have led to instances of information being inappropriately withheld from, and unreliable information being provided to, Wood’s auditors”, Wood said.

“There has been significant change within Wood and steps taken during and since the period covered by the review, including changes in key roles in finance and external expert assistance in the application of accounting standards.

“We are committed to implementing a detailed remediation plan, including necessary follow-on actions from the review, to continue to strengthen the group’s financial culture, governance and controls. This will include actions on culture, controls and organizational structure”.

To contact the author, email jov.onsat@rigzone.com