US-based financial services company HC2 Holdings and the Dutch multinational provider of geo-intelligence Fugro have sold offshore engineering specialist Global Marine Group (GMG) to private equity firm J.F. Lehman & Company for a sum of USD 250 million.
HC2 holds 73% of Global Marine Group’s shares, while Fugro holds 23.6% of the shares. Through its ownership of 23.6% in GMG, Fugro will monetize the remainder of its non-core interest in GMG, which is expected to result in proceeds for Fugro of close to USD 40 million.
Global Marine Group is made up of the three business units Global Marine, Global Offshore and CWind. The company provides a wide range of engineering services to the oil & gas and wind energy industries. In the UK and Europe alone, CWind has worked on more than 50 offshore wind projects.
"A subsidiary of Global Marine Holdings in which Fugro holds a 23.6% equity interest, has entered into a definitive agreement to sell 100% of GMG, excluding GMG’s 49% joint venture with Huawei Marine Networks Co., Limited (HMN), to an investment affiliate of J.F. Lehman & Company, LLC (JFLCO) for a total base consideration for 100% of GMG of approximately USD 250 million in cash, subject to customary closing adjustments, plus a potential future earn-out should JFLCO and its investment affiliates achieve a specified multiple of their invested capital," said a press note.
After repayment of approximately USD 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 USD 40 million. The transaction is expected to close by the end of the first quarter of 2020.
Mark Heine, CEO 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.”
This announcement follows an earlier release, from 30 October 2019, about the sale of GMG’s 49% stake in HMN to Hengtong Optic-Electric Co Ltd, in a transaction that values Fugro’s stake in HMN at approximately USD 33 million. Initially, 30% of HMN (which represents a value of approximately USD 20 million for Fugro) will be sold.
The remaining 19% of HMN that is under a two-year put-option agreement will remain as an indirect subsidiary of HC2 and Fugro . Completion of the 30% 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 approximately USD 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.