Aker Solutions is booking a $260 million impairment partly due to the cancellation by Total of a vessel charter off Angola, as the Norwegian company prepares to split into two entities.
Aker, which in late April revealed its plan to split the company, is taking a Nkr1.6 billion ($260 million) pre-tax hit, expected to come in at Nkr1.3 billion after tax, in its second-quarter results.
The impairments related to the Aker Oilfield Services unit of Akastor, one of the two companies that are being formed by the planned demerger. Akastor will, among other things, continue Aker Solutions' activities mainly related to drilling technologies, process systems, surface products and Aker Oilfield Services, as well as business solutions, some financial assets and real estate.
A Nkr664 million impairment will be taken on the well-intervention vessel Skandi Aker, which last month French supermajor Total dropped from a two-year charter worth $250 million for work off Angola. This and “a generally weaker market” have “created uncertainty about the value of the vessel”, Aker said.
A further Nkr662 impairment will be taken on the Aker Wayfarer “as some prior investments in the vessel have little or no value based on recently revised business cases and the current market outlook”, it continued.
Aker will also book a Nkr306 impairment on the goodwill value of the business area Oilfield Services and Marine Assets (OMA), to which Aker Oilfield Services belongs.
“Most of the Aker Wayfarer impairment and provision will impact earnings before interest, taxes, depreciation and amortization,” Aker continued.
“The Skandi Aker and OMA goodwill impairments will impact earnings before interest and taxes.”
Aker is pressing ahead with its plan to split the company into Aker Solutions Holding (to continue the Aker Solutions name) and Akastor, with the former getting 64.8% of current shares and the latter 35.2%. Aker Solutions will apply for a listing of its shares on the Oslo Stock Exchange around 27 August.
ABG Sundal Collier, Barclays and Carnegie will act as joint lead managers for the listing process.
The split is being made to cut costs, improve field development services to oil companies and give its other business areas more room to grow.
The new Aker Solutions will gather the engineering, subsea, umbilicals and maintenance, modifications and operations areas in a company.
“We are taking a major step in a transition that began 12 years ago with the merger of Kvaerner and Aker Maritime,” chairman Oyvind Eriksen said in late April. “After this and the 2011 Kvaerner spin-off, we will have created three distinct companies to service the global energy industry.”
Eriksen, who has been executive chairman for the past four years, will stay on as chairman of Aker Solutions, while leaving the reins as chief executive to the current regional president for Brazil Luis Araujo.
To lead Akastor the company has picked Frank Ove Reite, currently managing partner at investment consultant Converto and with several years’ experience within the Aker system. Eriksen and the group’s main owner Kjell Inge Rokke will both sit on Akastor’s board.