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) that will bring together the Subsea Drilling Systems (SDS) business of Baker Hughes with Akastor fully owned subsidiary, MHWirth AS (MHWirth). The Company will provide 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 supplier with integrated delivery capabilities, financial strength and flexibility to meet a full range of customer priorities. The company will be 50/50 owned by Baker Hughes and Akastor, and following the closing of the transaction, the operations of the company will be managed from the current offices of Houston, texas, and Kristiansand, Norway. Merrill A. “Pete” Miller will be President and CEO. Miller has worked in the oil and gas industry for over 40 years and has held a variety of leadership roles including President, President and CEO of National Oilwell Varco.
The company’s broader range of services will also provide a stronger foundation for future growth, including the ability to participate in the oil and gas industry’s transition to more energy efficient solutions, as well as the deployment of technologies and service solutions to make the sector more competitive. thanks to increased drilling efficiency.
“I would like to express my sincere gratitude for the good work and dedication of the respective teams of Baker Hughes and Akastor in making this possible despite the current challenges caused by the global COVID-19 pandemic,” said Karl Erik Kjelstad, CEO of Akastor. “I am confident that this company will give both organizations a solid foundation to meet the current challenges of today’s market and continue to be a leader in the development of advanced and efficient drilling solutions that support the industry’s transition to more sustainable operations. ”
“This transaction is a major milestone for MHWirth, and the transformation strategy announced in February 2019“Said Kristian M. Røkke, chairman of Akastor.” The company will provide its customers with an enhanced product offering and attractive value creation for investors. This transaction will also allow Akastor to maximize, and ultimately realize, value for its shareholders. ”
“The oil and gas industry is changing rapidly and we are constantly looking for new and innovative ways to deliver value to our customers,” said Neil Saunders, Executive Vice President of Oilfield Equipment at Baker Hughes. “This company is the ideal solution between our respective portfolios and further transforms our core businesses for long-term success, bringing complementary solutions to the market and offering our customers a full set of offshore drilling equipment.”
MHWirth is a global provider of advanced drilling solutions and services designed to provide customers with a safer, more efficient and more reliable alternative. MHWirth has a global reach spanning five continents with offices in 13 countries.
Baker Hughes ‘SDS business is a division of Baker Hughes’ Oilfield Equipment segment and is based 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 rash prevention (BOP) systems, controls and riser equipment.
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 act as advisers for Baker Hughes. Goldman Sachs, BAHR, Sidley austin, and EY act as advisers to 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 the management accounts of the respective companies and provided for guidance only. It may not be representative of the figures declared after the completion of the transaction. In addition, the information may not necessarily be comparable to similar information presented by other companies or be taken as an indication of the financial condition or results of operations of the company if the transaction had been completed on the dates indicated.
USD in millions1
Aggregated estimates for fiscal year 2020 (unaudited)
Aggregated estimates (unaudited) for the 2019 financial year
Aggregated estimates for the 2018 financial year (unaudited)
Adjusted EBITDA (IAS 17)3
1 Average FX used for the corresponding period
2 MHWirth group pro forma figures include MHWirth, Bronco Manufacturing (which has been part of MHWirth since June 2019) and Step Oiltools (who joined MHW Group in February 2020)
3 Items affecting comparability include material items outside normal operations, such as net gains or losses from divestitures and assets, costs of closing business and restructuring operations, and other costs of non-recurring nature.
Structure of the transaction and main conditions
The company will be 50/50 owned by Baker Hughes and Akastor. Akastor will contribute its shares of MHWirth to the Company in exchange for 50% of the shares and 120 million USD in consideration, of which 100 million USD is payable in cash at closing. Baker Hughes will bring the SDS business to the Company in exchange for the remaining 50% of the shares and 200 million USD in consideration, of which 120 million USD is payable in cash at closing. The Company will issue Notes to Baker Hughes and Akastor representing the balance of the consideration due to them. The Notes will be subordinated to the external debt financing of the Company.
The Company will fund the cash consideration payable to Baker Hughes and Akastor through a 220 million USD bank facility. In addition, the Company will also be financed by a 80 million USD working capital facility.
The transaction agreement between Akastor and Baker Hughes provides the usual terms for agreements of this nature, including representations and warranties relating to the companies made as well as a usual shareholder agreement for a 50/50 controlled company. , including governance and exit arrangements. Completion of the transaction is subject to customary conditions, including regulatory approval. The transaction is expected to close in 2 hours 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 the closing of the transaction.
After the closing of the transaction, it is expected that MHWirth will no longer be accounted for as a consolidated subsidiary of Akastor. Instead, it is intended that Akastor will treat the Company as a joint venture for accounting purposes and that after which Akastor will have to recognize 50% of the equity of the Company and 50% of the net profits of the Company in its accounts on the basis of “equity”. method”.
Implications for Baker Hughes’ accounting policies
Following the closing of the transaction, it is expected that SDS will no longer be accounted for in the Oilfield Equipment segment of Baker Hughes. Instead, it is expected that BKR will treat the Company as a joint venture for accounting purposes, after which BKR shall recognize 50% of the equity of the Company and 50% of the net profits of the Company in its accounts on the basis of the “equity method”. .
About Baker Hughes:
Baker Hughes (NYSE: BKR) is an energy technology company providing solutions to energy and industrial customers around the world. With a century of experience operating in more than 120 countries, our innovative technologies and services advance energy – making it safer, cleaner and more efficient for people and the planet. Visit us at bakerhughes.com.
About MHWirth and Akastor:
MHWirth is a 100% subsidiary of Akastor and represents a significant portion of Akastor’s revenues and assets. Akastor presented MHWirth as a separate segment in its financial statements. MHWirth, along with its subsidiaries, is a self-sustaining group that is a global provider of integrated drilling solutions and services with world-class technology, advanced engineering and project management capabilities. MHWirth Group delivered approximately 25% of all offshore drilling packages for floats between 2000 and 2018. With its headquarters in Kristiansand, MHWirth’s global operations span all five continents with offices in 13 countries.
Akastor is a Norwaypetroleum 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.
Akastor and MHWirth management will hold an investor conference in connection with the transaction announced on Tuesday 2 March 2021 at 2:00 p.m. CET, which will take place as a webcast and broadcast live. There will be a question and answer session after the presentation. The replay will be available on Akastor’s website.
Webcast and Live Replay Link:
The presentation will be available on www.akastor.com.
For more information, please contact:
Baker Hughes Investor Relations
Baker Hughes Media Relations
Phone: +47 917 59 705
This information is subject to disclosure obligations in accordance with Article 17 of Regulation EU 596/2014 (MAR), cf. section 5.12 of the Norwegian Securities Law.
This information was provided to you by Cision http://news.cision.com
The following files are available for download:
SOURCE Akastor ASA