Intertek pays $66.2m as Lamprell attempts to pay down debt after a disastrous 2012 in which the company issued multiple profit warnings.
Dubai-based rig-maker Lamprell sells services division to pay down debt
Lamprell, the UAE-based oil rig maker, has sold off one of its businesses for US$66.2 million as part of a campaign to pay down its debt.
The asset sale is the first by the company after it issued five profit warnings in 2012 related to problems in delivering two wind turbine installation vessels. Last year the London market regulator fined the company £2.4 million (Dh13.3m) for failing to warn investors swiftly enough.
“Over the last 18 months, Lamprell has refocused on its core activities of new build rigs, new build construction, land rigs and rig refurbishments,” said James Moffat, Lamprell’s chief executive. “As a result, the group has been actively pursuing options to dispose of certain of its service businesses and this disposal is a key part of that strategy.”
Shares of Lamprell trading in London dipped more than 2 per cent to 140 pence after yesterday’s announcement, less than half its 2012 high.
Proceeds from the sale of its testing service subsidiary to the UK-based Intertek Testing Services Holdings will go towards a high-cost tranche of a $181m debt facility secured last year, Lamprell announced yesterday.
The sold-off business, called International Inspection Services, counted $26m in assets as of the end of 2012 and independently turned a profit that year during a period of overall losses for the company. It employs 720 people. Lamprell has signed a preferred supplier agreement to use its services after its transfers to new owners.
It will continue to evaluate selling off other assets, it said.
“The group will continue with its process to dispose of the other non-core service businesses but only if acceptable terms can be obtained and subject to board approval,” the company said.
Despite swelling order books thanks to expanding oil production targets in the GCC and shale exploration in North America, other oil service providers are also facing headwinds. Last month Petrofac, which also has operations in the UAE, cautioned investors to expect “modest to flat” growth for 2014 after profits expanded 3 per cent last year.
Follow us on Twitter @Ind_Insights