The 400 people who work for Aberdeen’s troubled Sovereign Oilfield Group face an anxious wait after administrators were called in yesterday.
There are hopes, however, that most, if not all, of the jobs can be saved if a buyer can be found quickly for the group’s main fabrication businesses.
The administration only involves the holding company, not Sovereign’s operating subsidiaries which are trading as normal.
Administrator Bruce Cartwright told the Press and Journal last night he was keen to get a new owner soon for the four key businesses in the fabrication division, which employ the bulk of the group’s 400 staff.
Three of these subsidiaries are in the Aberdeen area and the fourth is based at Dunfermline. Mr Cartwright said: “We have to move quite quickly with a sale. I have already had expressions of interest from possible buyers for these profitable units. A quick sale will be the best way to preserve employment.”
Sovereign has been in the news frequently because of its problems.
Just last month, the oilfield service group’s shares plunged by 50% on the day it warned investors it was uncertain its future trading performance would be able to support its debts. Sovereign also said then that the board was reviewing its strategic options, which included a debt-for-equity swap, a capital injection, and disposals of some or all of its operating subsidiaries.
Mr Cartwright and Graham Frost of Pricewaterhouse Coopers (PwC) have now been appointed joint administrators at the request of the board.
Mr Cartwright said it was too early to know the level of debt at Sovereign, which joined the Alternative Investment Market in 2005. PwC said: “The group administration follows a period during which the board had sought to preserve value in its subsidiary businesses and reduce overall debt by seeking to sell certain parts of the business.
“The board has reluctantly concluded that it is no longer feasible to continue to explore this option without the protection of an administration order.”
Earlier yesterday, Sovereign said it had received enforcement orders from creditors.
It added that, without continued support from its lending consortium, it would be unable to meet these payments.
Sovereign has sold subsidiaries and properties in the past couple of years to raise money to reduce its debt and in line with its strategy of refocusing as a fabrication business.
The group revealed in December that it made pre-tax losses of £3.3million in the six months to September 30. This compared with a pre-tax deficit of £1.8million a year earlier. Two top bosses also departed Sovereign in December.
The firm announced the resignations of chairman and chief executive Graham Burgess and finance director Julie Cowie.
Sovereign was formed in October 2003 by Mr Burgess and Peter Felter. Mr Burgess has spent most of his career in the oil and gas industry. Previous posts include head of drilling and subsea engineering for Texaco North Sea and worldwide operations manager for Premier Oil.