- Joint venture company (Company) will combine the Baker
Hughes Subsea Drilling Systems (SDS) business and MHWirth to better
serve customers while simultaneously driving productivity and cost
synergies
- Company will have dual operational headquarters in
Houston, TX and Kristiansand,
Norway
HOUSTON and FORNEBU,
Norway, March 2, 2021 /PRNewswire/ -- Baker Hughes
(NYSE:BKR) and Akastor ASA (Oslo:AKAST) have announced an agreement
to create a joint venture company (Company) that will bring
together Baker Hughes' Subsea Drilling Systems (SDS) business with
Akastor's wholly owned subsidiary, MHWirth AS (MHWirth). The
Company will deliver a global full-service offshore drilling
equipment offering that will provide customers with a broad
portfolio of products and services.
The transaction will result in a leading equipment provider with
integrated delivery capabilities, financial strength, and
flexibility to address a full range of customer priorities. The
Company will be owned 50-50 by Baker Hughes and Akastor, and
following the closing of the transaction, the Company's operations
will be managed from current offices in Houston, Texas, and Kristiansand, Norway. Merrill A. "Pete" Miller will serve as
chairman and chief executive officer. Miller has been in the oil
and gas industry over 40 years holding various leadership roles
including chairman, president and chief executive officer of
National Oilwell Varco.
The Company's broader scope of services will also provide a more
solid foundation for future growth, including the capability to
participate in the oil & gas industry's transition towards more
energy-efficient solutions, as well as deploying technologies and
service solutions to make the sector more competitive through
increased drilling efficiency.
"I would like to express sincere gratitude to the good work and
dedication shown by the respective teams of Baker Hughes and
Akastor for making this happen despite the current challenges
caused by the global COVID-19 pandemic," said Karl Erik Kjelstad, CEO of Akastor. "I strongly
believe that this Company will give a solid basis for both
organizations to meet the current challenges in today's market and
to continue as a leader in developing advanced and efficient
drilling solutions that support the industry's transition towards
more sustainable operations."
"This transaction is a major step for MHWirth, and the
transformation strategy announced in February 2019," said Kristian M. Røkke, chairman
of Akastor. "The Company will offer customers a strengthened
product offering and investors attractive value creation. This
transaction will also allow Akastor to maximize, and ultimately
realize, value to its shareholders."
"The oil and gas industry is rapidly evolving, and we are
constantly looking at new and innovative ways of delivering value
to our customers," said Neil
Saunders, executive vice president of Oilfield Equipment at
Baker Hughes. "This Company is the perfect fit between our
respective portfolios and further transforms our core operations
for long-term success, bringing complementary solutions to market
and offering our customers a full offshore drilling equipment
package."
MHWirth is a global provider of advanced drilling solutions and
services designed to offer customers a safer, more efficient and
reliable alternative. MHWirth has a global span covering five
continents with offices in 13 countries.
Baker Hughes' SDS business is a division of the Oilfield
Equipment segment of Baker Hughes and is headquartered in
Houston. SDS provides integrated
drilling products and services worldwide, with service and
manufacturing facilities in 11 countries and a competitive
portfolio, including world-class blowout preventor (BOP) systems,
controls and riser equipment.
The closing of the transaction is subject to customary
conditions, including regulatory approvals, and is expected to
occur in the second half of 2021. Morgan Stanley, Paul Weiss, Thommessen, and EY are acting as
advisors for Baker Hughes. Goldman Sachs, BAHR, Sidley Austin, and EY are acting as advisors for
Akastor.
Key Financial information
The table below provides certain estimated pro-forma financial
information for the combined operations of SDS and
MHWirth. This information is unaudited, based on management
accounts for the respective companies and provided for illustrative
purposes only. It may not be representative of reported figures
following completion of the transaction. Further, the information
may not necessarily be comparable to similar information presented
by other companies nor relied upon as any indication of what the
Company's financial position or results of operations actually
would have been had the transaction been consummated as of the
dates indicated.
USD in
million1
|
FY 2020 Aggregated
estimates(unaudited)
|
FY 2019Aggregated
estimates(unaudited)
|
FY 2018 Aggregated
estimates(unaudited)
|
Revenue2
|
713
|
850
|
731
|
Adjusted EBITDA (IAS
17)3
|
102
|
139
|
93
|
Note:
1 Average FX used for corresponding period
2 Pro forma MHWirth Group figures include
MHWirth, Bronco Manufacturing (which has been part of MHWirth since
June 2019) and Step Oiltools (which
became part of MHW Group in February
2020)
3 Items affecting comparability comprises
material items outside normal business such as net gains or losses
from business and assets disposals, costs for closure of business
operations and restructurings, and other costs of non-recurring
nature.
Transaction structure and main conditions
The Company shall be owned 50/50 by Baker Hughes and Akastor.
Akastor shall contribute its shares in MHWirth to the Company in
return for 50% of the shares and USD 120
million in consideration, of which USD 100 million is payable in cash at closing.
Baker Hughes shall contribute the SDS business to the Company in
return for the other 50% of the shares and USD 200 million in consideration, of which
USD 120 million is payable in cash at
closing. The Company shall issue notes to Baker Hughes and Akastor
representing the balance of the consideration owed to them. The
notes shall be subordinated to the Company's external debt
financing.
The Company will finance the cash consideration payable to Baker
Hughes and Akastor by way of a USD 220
million bank facility. In addition, the Company will also be
financed by a USD 80 million working
capital facility.
The Transaction Agreement entered into by Akastor and Baker
Hughes provides for customary terms for agreements of this nature,
including representations and warranties relating to the businesses
being contributed as well as an agreed form shareholders
agreement customary for a 50/50 controlled company, including
governance and exit provisions. Completion of the Transaction is
subject to customary conditions, including regulatory approval. The
closing of the Transaction is expected to take place in 2H
2021.
Implications for Akastor's corporate credit facility and
accounting policies
The transaction will require the refinancing of Akastor's
existing corporate credit facility. Akastor has received
commitments for a NOK 1,250 million
revolving credit facility that will be entered into prior to
closing of the transaction.
Following completion of the transaction, it is expected that
MHWirth no longer shall be accounted for as a consolidated
subsidiary of Akastor. Instead, it is expected that Akastor shall
treat the Company as a joint venture for accounting purposes and
that, following which Akastor shall recognise 50% of the equity of
the Company and 50% of the Company net profits in its accounts
based on the "equity method".
Implications for Baker Hughes' accounting policies
Following completion of the transaction, it is expected that SDS
will no longer be accounted for under Baker Hughes' Oilfield
Equipment segment. Instead, it is expected that BKR shall treat the
Company as a joint venture for accounting purposes, following which
BKR shall recognise 50% of the equity of the Company and 50% of the
Company net profits in its accounts based on the "equity
method".
About Baker Hughes:
Baker Hughes (NYSE: BKR) is an energy technology company that
provides solutions to energy and industrial customers worldwide.
Built on a century of experience and with operations in over 120
countries, our innovative technologies and services are taking
energy forward - making it safer, cleaner and more efficient for
people and the planet. Visit us at bakerhughes.com.
About MHWirth and Akastor:
MHWirth is a wholly owned subsidiary of Akastor and accounts for
a material part of Akastor's revenues and assets. Akastor has
reported MHWirth as a separate segment in its financial statements.
MHWirth, with its subsidiaries, is a self-sufficient group which is
a global provider of integrated drilling solutions and services
with world class technology, leading engineering and project
management capabilities. The MHWirth group delivered in the range
of 25% of all offshore drilling packages for floaters between years
2000 and 2018. With its headquarters in Kristiansand,
MHWirth's global operations covers five continents with offices in
13 countries.
Akastor is a Norway-based
oil-services investment company with a portfolio of industrial
holdings and other investments. The company has a flexible mandate
for active ownership and long-term value creation.
The management of Akastor and MHWirth will hold an investor
conference in relation to the announced transaction on Tuesday March 2, 2021 at 14:00 CET, which will be held as a webcast only
and audiocasted live. There will be a Q&A session following the
presentation. The replay will be made available on Akastor's
website.
Live webcast and replay link:
https://channel.royalcast.com/landingpage/hegnarmedia/20210302_2/
The presentation will be available
at www.akastor.com.
For further information, please contact:
Baker Hughes Investor Relations
Jud Bailey
+1 281-809-9088
investor.relations@bakerhughes.com
Baker Hughes Media Relations
Thomas Millas
+1 713-879-2862
Thomas.millas@bakerhughes.com
Akastor
Øyvind Paaske
Chief Financial Officer
Tel: +47 917 59 705
Oyvind.paaske@akastor.com
This information is subject to the disclosure requirements
pursuant to Regulation EU 596/2014 (MAR) article 17,
cf section 5.12 of the Norwegian Securities Trading Act.
This information was brought to you by Cision
http://news.cision.com
The following files are available for download:
https://mb.cision.com/Public/18618/3296423/b340c190fa9587cb.pdf
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Akastor ASA stock
exchange release 2 March 2021
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