Sovereign Oilfield Group said yesterday it had agreed to sell another subsidiary and its headquarters offices in Aberdeen to reduce debt.
The subsidiary being disposed of is Prodrill, which provides oil field recruitment services and will be sold for a total of £2.25million while Sovereign House will be sold for a total of £1.575million.
Prodrill is to be bought by Claymore Investments, a company owned by certain directors and shareholders of Sovereign, who will pay £1.25million in cash on completion and a further four half-yearly instalments of £250,000 each.
Sovereign has also reached a conditional agreement for the sale and leaseback of Sovereign House, 4 Queens Terrace, Aberdeen, with Tilestamp, a private company based at Milltimber, Aberdeen. Its directors include Dana Petroleum chief executive Tom Cross.
Sovereign House will remain Sovereign’s head office.
The deal will see Sovereign receive £1.575million in cash and lease the building for £120,000 a year for five years, with the rental increasing to the greater of £132,500 or the open market rental value of the property after that.
Both sales are subject to shareholder approval, and will be put to a general meeting to be held at Sovereign House on Wednesday, August 26.
Sovereign has already sold subsidiary Vertec Engineering and the cabin rental fleet of Labtech this year and said that the latest sales would reduce debt and provide additional working capital.
Executive chairman Graham Burgess said: “Sovereign has been working tirelessly over the last year to reshape the group and to reduce debt.
“The disposals of Prodrill and Sovereign House represent a significant step forward for the group, which in the last 12 months has realised £12.79million to pay down debt and increase working capital.
“This will allow the group to focus on the core strengths in its remaining drilling and fabrication division businesses.”
Sovereign said yesterday that for the year to March 31, 2008 the turnover of the remaining businesses was £75.5million and gross profits were £20.4million before central running costs.