Wood Group to return £1.05bn to shareholders

Published on Monday 16 May 2011 15:23

OIL services giant Wood Group yesterday outlined how it plans to return £1.05 billion of cash to shareholders in a move which will see the founding family and charities raise at least £123 million by cutting their stake in the company.

The Aberdeen-based firm yesterday announced it plans a tender offer to investors to sell part of their holding following the 1.75bn disposal of its well support division to General Electric.

Trusts established to hold the shares of some members of the Wood family and charitable interests, which together own 11.7 per cent of the company, have said they will tender more than the guaranteed minimum entitlement of 20.4 million shares under the offer.

The company said the sale by the trusts would enable them to "diversify their highly concentrated position" in Wood Group shares within their portfolios.

But chairman Sir Ian Wood, who owns around 5 per cent of the company worth around 175 m, and his fellow board members do not intend to take part in the offer.

The company had first announced plans to return cash to shareholders in February following the sale of its well support division for a much higher figure than it was expected to realise.

Some of the proceeds have already been used to pay for its purchase of North east-based oil production services company PSN which it agreed to buy for 600m in December.

Wood Group said the tender offer route had been chosen as it provides shareholders with the option to reduce or to retain their holding and would provide increased earnings per share benefits.

Under the tender offer, the company will purchase up to 173.6 million shares, or 32.1 per cent of the share capital of the company. Investors can tender their shares within a price range of 605p to 625p per share representing a discount of 6.1 to 3.0 per cent to the closing price of 644.5p on 13 May, the last trading day before the announcement of the tender offer.

A "strike price" will be announced after the closing date for the offer on 1 June.

Shareholders have a guaranteed entitlement in respect of up to approximately 32.1 per cent of each holding if the strike price is the minimum in the price range.

If the scheme is approved by shareholders at a general meeting, cheques should be posted on 7 June. If the offer is not fully subscribed, the company plans to return any remaining cash via a "B share" scheme.

Allister Langlands, chief executive of Wood Group, said : "Following the return of cash, our balance sheet will continue to provide a strong platform for growth."

Keith Morris of Evo Securities said on first glance the tender offer did not look that attractive given it is at a discount to the current share price.

"But this may reflect the outlook contained in the predominantly "reasonable" trading statement last week. We still believe that there are better growth prospects elsewhere in the oil service space."

At the time of the agreement of the sale Wood Group said it would allow the company to focus on its core areas of engineering and production support along with gas turbine services.

Shares in Wood Group fell 0.5p to close at 644p.