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Newpark Resources, Inc. (NYSE:NR) has announced the successful completion of the sale of its Fluids Systems segment to SCF Partners, Inc., a leading private equity firm specializing in the global energy sector. The transaction, marking a significant strategic shift for Newpark, was executed at a base sale price of USD 127.5 million. However, the final net consideration received from the sale amounts to USD 56 million, which includes an initial cash payment of USD 70 million, adjusted by USD 19 million for foreign cash conveyed with the business and a USD 5 million interest-bearing seller note receivable. The overall purchase price is subject to adjustments based on final calculations of working capital, accrued taxes, certain other liabilities, and outstanding debt.
The transaction included an adjustment of USD 43 million to the base price due to lower-than-expected working capital at closing compared to the average net working capital balance for 2023, along with accrued taxes and other liabilities. Additionally, USD 10 million of outstanding debt was factored into the deal. Following the sale, Newpark anticipates recognizing a loss on the transaction, which is expected to generate additional U.S. federal net operating loss tax benefits in the range of USD 7 million to USD 10 million. Combined with approximately USD 20 million in existing U.S. federal net operating loss and other credit carryforwards, these benefits will help offset future U.S. federal tax obligations.
As a result of the sale, the Fluids Systems segment will be reclassified as Discontinued Operations in all future financial reports. Concurrently, Newpark has amended its U.S. asset-based revolving credit agreement, reducing the facility size from USD 175 million to USD 100 million. As of September 13, 2024, the company reported total cash of approximately USD 40 million and pro forma availability of about USD 55 million under the ABL Facility. The net proceeds from the sale are intended for strategic investments, including expanding the composite matting fleet, pursuing opportunistic inorganic growth, and conducting share buybacks under its existing USD 50 million share repurchase authorization. This sale is a key element of Newpark’s strategic realignment, allowing the company to focus on its core operations and future growth opportunities.
