Wood Group raises $165 million from non-core business sales

John Wood Group is expected to post net income of around $165 million after agreeing to sell two business units.

The FTSE 250 oil services firm told investors on Wednesday it had agreed to sell CEC Controls Company and its stake in its Ethos Energy Group joint venture with Siemens Energy.

Wood Group, which posted a loss of $899 million in the first half, is carrying out a programme of selling non-core businesses amid an efficiency drive.

This follows the collapse of a deal that would have seen Wood Group acquired by Dubai-based engineering firm Sidara for £1.6bn.

Wood Group said it would sell its 51 percent stake in rotating equipment specialist EthosEnergy to private equity firm One Equity Partners, which will buy the entire business after also reaching a deal with Siemens Energy.

Net cash proceeds of $95 million are expected upon completion of the deal later this year, subject to regulatory approval, as well as repayment of $42 million in loan notes plus interest due in approximately five years.

The joint venture employs approximately 3,600 people worldwide and contributed $34 million of adjusted earnings before losses to Wood’s results last year.

CEC Controls, a leading industrial and process control systems business and its affiliated entity in Mexico, will be sold to German industrial group SCIO Automation Group for cash consideration of $30 million, Wood said.

The company, which employs about 20 people worldwide and is headquartered in Michigan, generated $66 million in revenue and $6 million in adjusted earnings before closings last year.

Wood expects to generate net cash proceeds of approximately $29 million upon completion, subject to working capital adjustments.

Chief strategy officer Jennifer Richmond said: ‘The sale of these two non-core businesses is further evidence of the progress of our strategy.

‘We continue to review Wood’s portfolio in line with our strategic priorities to be selective in our markets and capabilities and steadfast in our commitment to simplify Wood and deliver greater cash flexibility.’