Scottish oil and gas drilling giant KCA Deutag is changing hands as part of a financial restructuring to slash debt.
Details of the north-east company’s looming transfer of ownership emerged in third quarter results yesterday.
KCA revealed in September it had struck a deal with lenders to refinance. At today’s exchange rates, the “binding lock-up agreement” is expected to wipe more than £1 billion off the company’s £1.4bn debt pile.
Yesterday’s Q3 and nine-month results shed more light on the implications of that deal, in particular the debt-for-equity swap at the heart of it.
KCA, which is currently owned by London and New York-based Pamplona Capital Management, said: “The group intends to complete the proposed financial restructuring before the end of 2020.
On the successful completion of the restructuring, the KCA Deutag Alpha Group will be owned by Kelly Topco Limited, a newly-formed entity.”
The shareholders of Kelly Topco comprise holders of the pre-restructuring secured debt, which was partially swapped for equity in the new parent.
KCA said Kelly Topco’s board would be made up of non-executive directors as well as members of the drilling company’s executive team.
Employing nearly 9,300 people globally, KCA operates about 110 drilling rigs in 20 countries, either directly or through affiliates.
Its workforce is spread across operations in Europe, Russia, the Middle East, the Caspian Sea, Africa and Canada.
The company’s global headquarters are in the City South business park, between Aberdeen and Portlethen.
Earlier this year it emerged KCA was consulting workers over 200 potential redundancies in its UK North Sea operations.
Pamplona co-invested with US-based First Reserve in a £906 million buyout of the KCA Deutag business, then called Abbot Group, in March 2008.
First Reserve exited the partnership in late 2010, transferring its majority stake to Pamplona – giving the latter firm 100%.
Just a few months later it emerged KCA could see some of its lenders exchange debts for stakes in the company.
Pamplona reportedly secured the backing of junior lenders for those plans, which came hot on the heels of KCA saying it was looking at strategic alternatives, including a possible sale of the business, aimed at strengthening its capital structure.
North-east farmer and businessman Alasdair Locke founded the oil and gas service company in 1992 and collected nearly £120m from a deal announced in December 2007 to take it private.
KCA’s Q3 2020 results revealed pre-tax losses widened to £52m in the three months to September 30, from £26m a year earlier. Sales totalled £193m in the latest period, down from £235m previously.
Pre-tax profits over the nine months to September 30 2020 totalled £121.7m, against a deficit of £91m a year ago.
Sales for the latest nine-month period totalled £660m, down from £767m last time.
KCA said it was continuing to monitor the Covid-19 outbreak closely and responding to economic uncertainty in order to mitigate any adverse impact on operations and employees.
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