Acquisition of AFW UK and Associated Capital Raising

Source Press Release
Company Amec Foster Wheeler PlcWorleyParsons Limited 
Tags Oil Services, Corporate Deals, Deals
Date October 09, 2017

Highlights

  • Acquisition of 100% of AFW UK Oil & Gas Limited (“AFW UK”) – a world class MMO service provider in the UK oil and gas sector
  • Enterprise value £182 million1 (A$303 million), is expected to be EPS accretive to WorleyParsons and reduce net debt / EBITDA
  • Robust entry for WorleyParsons into the UK North Sea market as a profitable market leader
  • Acceleration of WorleyParsons’ strategy to build a global MMO business
  • Growth potential from the combination of AFW UK capability with WorleyParsons' global network
  • Strong management team and a track record of global expansion
  • Implied (pre synergy) maintainable EBITDA2 multiple of 8.9x
  • Acquisition funded via A$322 million entitlement offer

Acquisition of AFW UK

WorleyParsons Limited (“WorleyParsons”) has entered into a binding agreement to acquire AFW UK for an enterprise value of £182 million (A$303 million1), pre-adjustments for surplus working capital and cash in the AFW UK business (“Acquisition”).

The combination of the Acquisition and the Entitlement Offer is expected to be EPS accretive in the first year of ownership (pre-synergies, transaction costs and acquisition related amortisation). Pro-forma net debt / EBITDA (June 2017) reduces from 2.4x to 2.2x3.

AFW UK Upstream Oil and Gas Operations

AFW UK has world-class Maintenance, Modifications and Operations (“MMO”) capabilities and is a leader in the Engineering & Construction, Operations and Maintenance and Hook-up services markets on the UK Continental Shelf. The business represents the majority of Amec FosterWheeler's former UK upstream Oil and Gas operations, to be divested as a remedy to competition concerns raised in relation to the John Wood Group's acquisition of Amec FosterWheeler.

AFW UK has maintainable revenue2 of approximately £350 million and maintainable EBITDA2 of £20 million per annum.

Acquisition Aligned with WorleyParsons Strategy

The acquisition of AFW UK represents a compelling transaction that is consistent with WorleyParsons' existing strategic growth objectives. Strategic benefits include:

  • Robust entry into the UK North Sea as a profitable market leader;
  • Acceleration of WorleyParsons’ corporate strategy to build a world class global MMO capability in the Integrated Solutions business line;
  • Combines AFW UK’s capabilities and strong track record of global expansion with WorleyParsons’ global network to create a genuine global MMO business; and
  • The addition of execution capability and experience to WorleyParsons with mature systems and processes to support efficient global MMO execution.

The global MMO market is attractive and growing. It forms part of customer long term opex spend which is less susceptible to capital constrained cycles.

WorleyParsons CEO Andrew Wood said “AFW UK represents an attractive acquisition for WorleyParsons. We are excited to enter the UK North Sea market as a leading player based in Aberdeen. AFW UK is a world class integrated solutions business with best in class MMO capabilities and an excellent track record of

international expansion. We look forward to combining AFW UK’s capabilities with our international platform to create a global MMO business capable of driving medium term growth.”

Funding

The Acquisition enterprise value is £182 million (A$303 million)4 pre-adjustments for surplus working capital and cash in the AFW UK business. Including the value of these adjustments, the total acquisition consideration is £228 million (A$380 million).

The Acquisition will be funded through a 1 for 10 fully underwritten, pro-rata, accelerated non- renounceable entitlement offer of approximately $322 million (“Entitlement Offer”) and existing WorleyParsons debt facilities.

The Entitlement Offer will be used to fund 100% of the AFW UK enterprise value pre-adjustments, with the value of adjustments for working capital and cash in AFW UK to be primarily debt funded. WorleyParsons expects the debt drawn to fund the adjustments, which will be repaid in the short term as WorleyParsons receives the majority of these items in cash upon completion or shortly thereafter.

Under the Entitlement Offer, eligible shareholders are invited to subscribe for 1 new WorleyParsons share (“New Shares”) for every 10 existing WorleyParsons shares (“Entitlement”) held as at 7:00pm (AEDT) on Wednesday, 11 October 2017 (“Record date”).

All shares offered under the Entitlement Offer will be issued at a price of $13.00 per New Share, which represents an:

  • 8.7% discount to the last close price of $14.24 on Friday, 6 October 2017
  • 8.0% discount to the theoretical ex-rights price (“TERP”) of $14.135

Approximately 24.8 million new WorleyParsons shares will be issued under the Entitlement Offer. Each New Share issued under the Entitlement Offer will rank equally with existing WorleyParsons shares on issue. WorleyParsons will, upon issue of the New Shares under the Entitlement Offer, seek quotation of the New Shares on the ASX.

Dar Group and John Grill have committed to participate in the Entitlement Offer for all of their respective pro-rata entitlements.

Completion of the Acquisition is expected by the end of October 2017.

Offer timetable

A timetable of key dates in relation to the Entitlement Offer is set out below. The timetable is indicative only and dates and times are subject to change without notice.

Event  Date 
Trading halt and announcement of acquisition and Entitlement Offer  Monday, 9 October 2017 
Institutional Entitlement Offer opens  Monday, 9 October 2017 
Institutional Entitlement Offer closes  Tuesday, 10 October 2017 
Trading halt lifted / announcement of results of Institutional Entitlement Offer  Wednesday, 11 October 2017 
Record date under the Entitlement Offer  7:00pmWednesday, 11 October 2017 
Retail offer booklet despatched and Retail Entitlement Offer opens  Monday, 16 October 2017 
Institutional settlement date  Tuesday, 17 October 2017 
Institutional allotment and trading date  Wednesday, 18 October 2017 
Retail Entitlement Offer closes  5:00pmWednesday, 25 October 2017 
Retail allotment date  Thursday, 2 November 2017 
Retail trading date  Friday, 3 November 2017 
Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd