WorleyParsons’ Shares Tumbled On ASX Despite Announcing The Completion Of Retail Entitlement Offer

  • Nov 12, 2018 AEDT
  • Team Kalkine
WorleyParsons’ Shares Tumbled On ASX Despite Announcing The Completion Of Retail Entitlement Offer

On 12 November 2018, WorleyParsons Limited (ASX: WOR) announced the successful completion of the retail component of its 1 for 1.47 accelerated non-renounceable pro-rata entitlement offer of new WorleyParsons shares. Following the release of this news, the share price of the company decreased by 0.493 percent as on 12 November 2018.

The Retail Entitlement Offer raised approximately $1.1bn at $15.56 per share and together with the institutional component of the Entitlement Offer, the total amount raised under the Entitlement Offer is around $2.9bn. The company received around $571m of applications under the Retail Entitlement Offer, including entitlements taken up by Dar Group, resulting in a take-up rate of 51% in the Retail Entitlement Offer. The new shares issued under the Retail Entitlement Offer will rank equally in all respects with existing shares, and they are expected to be allotted on 15 November 2018. 

The company is planning to use the part of the proceeds from the entitlement offer to fund the acquisition of Jacobs Engineering Group Inc.’s Energy, Chemicals and Resources division. In the month of October, the company entered into a binding agreement to acquire Jacobs Engineering Group Inc.’s Energy, Chemicals and Resources division for cash and a debt-free enterprise value of US$3.3 billion. It is expected that this transaction will deliver around 20 percent EPS accretion on an FY 2018 pro-forma basis. And it is expected that through this transaction, the company will achieve run-rate cost synergies of approximately A$130 million per annum within two years.

Recently, the company announced that it has been awarded a frame agreement for engineering and construction (E&C) services under which the company will provide E&C services to assets in the central and southern North Sea. The company has also been awarded an engineering, procurement, and construction (EPC) contract in the UK with ConocoPhillips U.K and under the contract, the company will be providing EPC services for a subsea tieback project to an existing platform. Recently, the company also announced that Rosenberg WorleyParsons has been awarded an EPCI contract by Lundin Norway. As per the contract, the services include planning, engineering, prefabrication, offshore installation, and commissioning support.

In FY 2018, the aggregated revenue of the company increased by 8.5 percent to $4,749.2 million as compared to last year. The EBIT margin increased by 2.6pp to 5.6 percent and EBIT of the company increased by 103.5 percent to $263.8 million in FY18. The Net profit after tax increased by 85.7 percent to $62.2 million and the basic earnings per share increased by 73.9 percent to 23.3 cents. The cash flow from operations increased by 229.2 percent to $259.7 million.

In the last six months, the share price of the company decreased by 2.14 percent as on 9 November 2018, traded at a PE level of 65.320x. WOR’s shares traded at $15.080 with a market capitalization of circa $5.93 billion as on 12 November 2018 (AEST 2:04 PM).


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