Fugro to earn $40 million from Global Marine Group stake sale

Dutch geotechnical services provider Fugro expects to earn around $40 million from the sale of HC2 Holdings’ subsidiary Global Marine Group (GMG).

One of Fugro’s vessels; Source: Fugro

Fugro said on Thursday that it would monetize the remainder of its non-core 23.6% interest in GMG, which was expected to result in proceeds for Fugro of close to $40 million.

According to the company, GMG would be sold in its entirety via a definitive agreement, excluding GMG’s 49 percent joint venture with Huawei Marine Networks (HMN), to an investment affiliate of J.F. Lehman & Company (JFLCO) for a total base consideration of around $250 million in cash plus a potential future earn-out should JFLCO and its investment affiliates achieve a specified multiple of their invested capital.

After repayment of approximately $97 million of pension and debt obligations at GMG, as well as other customary closing adjustments, taxes and transaction fees, Fugro’s share in this transaction is expected to be close to $40 million.

The company added that the transaction was expected to close by the end of the first quarter of 2020.

Mark Heine, CEO of Fugro, said: “I am very pleased with this transaction, which has been very professionally led by the GMG management. It is an important step towards monetizing our non-core activities. This divestment will enable us to focus further on our core business and deliver on our Path to Profitable Growth strategy.”

It is worth noting that the sale of GMG’s 49 percent stake in HMN to Hengtong Optic-Electric was announced on October 30, 2019.

The transaction values Fugro’s stake in HMN at approximately $33 million. Initially, 30 percent of HMN (which represents a value of approximately $20 million for Fugro) will be sold. The remaining 19 percent of HMN that is under a two-year put-option agreement will remain as an indirect subsidiary of HC2 and Fugro.

The completion of the 30 percent tranche of this transaction continues to be expected in the first quarter of 2020.

Fugro’s share of the net proceeds from the divestment of its stake in GMG and HMN is some $73 million in total and is expected to lead to a positive transaction result. The proceeds will be utilized to reduce Fugro’s outstanding debt position.

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