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Energy firm sells nuclear arm for £250m to cut debts

Aberdeen-headquartered John Wood Group has agreed the sale with US-based Jacobs.

Deal: John Wood Group has agreed the sale with US-based Jacobs.
Deal: John Wood Group has agreed the sale with US-based Jacobs. Wood Group

An Aberdeen-headquartered energy company is set to offload its nuclear business for £250m as part of a drive to cut down debt levels.

John Wood Group has agreed the sale with US-based Jacobs, but the deal is yet to be given clearance by the Competition and Markets Authority.

If the UK regulator rejects the offer, Jacobs has agreed to pay Wood a fee of £7.5m.

David Kemp, Wood's chief financial officer, 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."

Wood - which provides a range of engineering, production support and maintenance management services to the energy and industrial sectors - is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.

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 £770m contract with the Sellafield nuclear decommissioning site in Cumbria.

The deal will allow the company to deleverage, after taking on debt for its acquisition of Amec Foster Wheeler two years ago.

The company reported that it had swung to a profit of $13m for the six months to June 30, compared with a $52m loss this time last year.

This was despite a 2.6% decline in revenue during the period to $4.79bn, slightly undershooting guidance that it would be in line with the previous year.

Net debt of $1.77bn also missed guidance that it would be closer to $1.6bn.

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 announcement on Tuesday, trading down 0.07% by mid-morning.

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