Engineering services giant, John Wood Group (wood.) is seeking shareholder approval for a temporary suspension of its borrowing limit, as the company faces a potential breach of its financial rules.
The move comes as Aberdeen-based wood’s borrowings are set to exceed the established borrowing cap, which is tied to its capital and reserves.
This discovery was made while the company worked with its auditor to finalise its accounts for the year ended 31 December 2024.
Such a breach could trigger a default on its debt facilities, severely impacting liquidity and putting its proposed acquisition by Dubai-headquartered investor, Sidara at risk – a deal that has been more than a year in the making and is considered “critical” to the company’s future.
To avoid this, the board has called for a resolution to lift the borrowing limit until 31 October 2028, citing the need for additional financing to support ongoing business operations and initiatives through the period.
Directors have warned that failure to secure approval for the borrowing limit could have serious consequences for both the company’s financial stability and shareholder value.
While its acquisition by Sidara, which has promised a $450 million cash injection, is already contingent on several factors, including the release of wood’s accounts for the year ended 31 October 2025 and an extension of its debt facilities through to 2028.
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The ongoing acquisition is part of a larger refinancing and recapitalisation deal designed to address the company’s “financial challenges”.
This includes concerns over wood’s financial health, which led to an FCA investigation and prompted changes such as seeking external expertise to improve accounting practices.
Despite efforts to transition away from high-risk contracts and streamline operations, wood has not generated sustainable cash flow since 2017, with a $1.5 billion cash outflow due to fines, losses, restructuring, and litigation, alongside $1.6 billion in gross debt.
Directors unanimously recommend shareholders vote in favour of lifting its borrowing limit, with a meeting set to take place later this month to decide the matter.
If approved, the suspension will ensure the company, which is set to release its HY1 2025 results in late October or November, can continue to operate without disruption while the acquisition process moves forward.
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