Weir Group continues to eye oil and gas exit as it refinances £965m with bankers

Glasgow-headquartered engineering group Weir yesterday said it was continuing to look at exit options for its oil and gas division which has suffered a “significant step-down” in activity levels in recent weeks.

The trading update came as Glasgow-headquartered Weir Group also said it has refinanced its lending facilities. Picture: Weir Group

The trading update came as Weir also said it has refinanced around £965 milllion of lending facilities with 12 banks at a slightly higher cost in a move which extends them until at least March 2022.

The fall in oil prices has hit North American oil and gas markets in the second quarter of the year but Weir said cost mitigation actions have been successfully executed and it expects the division to be cash generative, adding it was continuing to explore options to “maximise value from the division at the right time”.

However, Weir said its mining markets were proving resilient during the pandemic.

The new financing facilities, which replace ones due to mature on or before September 2021, comprise a £765m revolving facility which will mature in June 2023 and a new £200m term loan maturing in March 2022.

Weir said the interest margin is slightly higher than current levels reflecting market conditions but said it remains “highly competitive” and significantly lower than its existing long-term bonds.

It also stressed it continues to have a strong liquidity position including around £500m of immediately available facilities and cash balances. It also has access to up to £300m as part of the UK government’s coronavirus support programme.

The group has previously withdrawn guidance for its performance this financial year due to the uncertainty. Analysts at Shore Capital yesterday said they were maintaining their “hold” recommendation on the shares in light of the update.

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