UK Markets closed

Wood Group strikes £250m deal for nuclear arm

By Alys Key, PA City Reporter

John Wood Group has agreed the sale of its nuclear business for £250 million in a bid to cut its debt pile.

The energy company, which has its headquarters in Aberdeen, said the deal with US group Jacobs would allow it to deleverage, after taking on debt for its acquisition of Amec Foster Wheeler two years ago.

Chief financial officer David Kemp said: “The sale of our nuclear business follows other recent divestments and marks a significant step towards achieving Wood’s target leverage policy.

“Although our nuclear business is a strong UK player and has performed well, we see better opportunities to develop clear global leadership positions across other parts of our business.”

The nuclear arm of the company provides engineering design and maintenance for a few sites, almost all of them in the UK.

Its projects include a £770 million contract with the Sellafield nuclear decommissioning site in Cumbria.

The deal also includes an agreement that Jacobs will pay Wood a fee of £7.5 million if the UK’s competition watchdog does not clear the transaction.

The company also reported that it had swung to a profit of 13 million US dollars (£10.75 million) for the six months to June 30, compared with a 52 million dollar (£43 million) loss this time last year.

This was despite a 2.6% decline in revenue during the period to 4.79 billion dollars (£3.96 billion), slightly undershooting guidance that it would be in line with the previous year.

Net debt of 1.77 billion dollars (£1.46 billion) also missed guidance that it would be closer to 1.6 billion dollars (£1.32 billion).

The company said this was due to a delay in two cash receipts which had been expected in June but were not received until July.

Shares in the company were mixed following the announcements, trading down 0.07% in mid-morning.