John Wood Group has announced a significant refinancing deal with UAE-based Sidara (Bidco), aimed at rescuing the company from a prolonged period of financial difficulty. The agreement will see Wood become Sidara’s Energy and Materials division, retaining its brand and receiving a substantial cash injection.
Key Takeaways
- Wood Group has experienced eight consecutive years of negative cash flow, with outflows totalling approximately $1.5 billion between 2017 and 2024.
- The refinancing deal involves a $450 million cash injection from Sidara, with $250 million available immediately to Wood shareholders.
- The deal is contingent on the release of Wood’s accounts for the year ending October 2025 and an extension of its debt facilities.
- An FCA investigation into Wood’s financial health was prompted by findings of "material weaknesses" in its Projects division.
A Troubled Financial History
Despite efforts to pivot away from high-risk contracts and streamline operations, John Wood Group has struggled to generate positive free cash flow since 2017. The company has faced significant cash outflows, amounting to roughly $1.5 billion over the past eight years. These outflows were attributed to regulatory fines, loss-making contracts, restructuring charges, litigation payments, and substantial gross debt of approximately $1.6 billion. Wood’s management acknowledged that the company’s current capital structure was "unsustainable."
Sidara’s Intervention and Deal Structure
The new agreement will integrate Wood into Sidara’s operations as its Energy and Materials division, while preserving the Wood brand. Sidara, a consortium led by Dar Al-Handasah Consultants Shair & Partners Holdings Limited, will provide a $450 million cash injection. Of this amount, $250 million will be made available to Wood shareholders immediately, with the remaining $200 million to be released upon the deal’s completion.
Wood’s Chief Executive, Ken Gilmartin, stated that the acquisition by Sidara is expected to address the company’s immediate liquidity challenges and bolster its long-term strength. The deal is subject to several conditions, including the finalisation of Wood’s accounts for the year ending 31 October 2025 and an extension of its debt facilities until October 2028. The completion of the acquisition is anticipated in the first half of 2026.
Regulatory Scrutiny and Internal Issues
Concerns regarding Wood’s financial health led to a formal investigation by the Financial Conduct Authority (FCA). This investigation, spanning from January 2023 to November 2024, was initiated following findings by Deloitte, which uncovered "material weaknesses" within Wood’s Projects division. These weaknesses included management pressure to maintain reported positions and overly optimistic accounting judgments, which resulted in withheld information from auditors and unreliable data.
In response to these findings, Wood has implemented significant changes, including adjustments to key finance roles and the engagement of external expertise to enhance its adherence to accounting standards. The company’s board has indicated that, after exploring various refinancing options, the acquisition by Sidara represents the most favourable outcome for its shareholders, creditors, and stakeholders.
