When a younger Ian Wooden splashed out on an imposing presence for his household’s firm on the inaugural Offshore Europe convention on the College of Aberdeen in 1973, his father John was aghast.
Sir Ian — he was knighted in 1994 — has recalled since how Wooden senior, head of the household’s fishing firm, thought his son was spending far an excessive amount of on advertising the enterprise’s offshore experience to the nascent North Sea oil sector.
However the gamble paid off handsomely for the offshore engineering arm, which was spun out of the household firm in 1982 and listed 20 years later. Wooden Group turned synonymous with the transformation of Aberdeen from a fishing port to an oil and gasoline boomtown famend for exporting its power experience internationally.
But, as Aberdeen grapples with the maturing of the North Sea basin, the group’s struggles with a heavy debt load and disappointing earnings performances have come to symbolise the town’s decline.
Wooden Group had been one of many few homegrown success tales of the UK’s growth of the North Sea, changing into a real multinational with world partnerships with titans of the oil business reminiscent of ExxonMobil and Chevron. Its market worth reached a peak of £5.3bn in 2018.
Paul de Leeuw, director of the Power Transition Institute at Aberdeen’s Robert Gordon College, stated Wooden was an “iconic firm” with a “complete legacy” in Aberdeen.
“For a lot of the period of the business, it’s been constant by all of the twists and turns,” de Leeuw stated.
Nevertheless, a decade of world growth, launched after Sir Ian retired in 2012, has proved disastrous. The push led to a debt-laden battle for money, haemorrhaging expertise amid cost-cutting drives.
The corporate’s market worth slid from that 2018 peak at first as a result of greater rates of interest and a slowdown in business exercise hit its enterprise mannequin. It tumbled by greater than 60 per cent this February, to lower than £200mn, after Wooden revealed it was persevering with to burn money. A Deloitte overview additionally uncovered “materials” governance weaknesses in its tasks division.
As well as, chief monetary officer Arvind Balan was pressured to step down on February 19 after admitting misstating his accountancy {qualifications}, following questions from the Monetary Occasions. Iain Torrens, former CFO of brokerage ICAP, was introduced in as an interim alternative this week.
Wooden has $1.4bn in numerous debt services to refinance by October 2026, leaving it in a deadly place.
One business veteran who has tracked the corporate’s travails intently stated Wooden had spun “its personal dying spiral”.
“It is a disaster that went slowly, slowly, slowly then immediately, and that’s as a result of the board has been a lot too hesitant to confess that issues had been unravelling,” the veteran stated.
In lower than two years, the corporate has failed to succeed in settlement on a takeover supply from personal fairness group Apollo that may have valued it at about £2.2bn and one other from Dubai-based rival Sidara that may have valued it at £1.6bn. Sidara this week returned for its second buyout try at what’s now anticipated to be a considerably cheaper price.
The veteran stated Wooden had ignored “a number of escape chutes on the way in which down”, notably the takeover approaches.
“Now shareholders are going to presumably get a a lot worse deal,” he stated. “Shareholders have a proper to be offended.”
In accordance with individuals near the unique discussions with Sidara final 12 months, there was a notion that the Wooden board scarcely believed a UK establishment is perhaps offered to a Center Japanese rival.
That was a “failure to learn the room”, one adviser stated.
“There was a way that these guys weren’t really severe a few sale — that regardless of having accomplished due diligence that this was solely the beginning of a dialogue, reasonably than a precursor to hammering out the ultimate particulars,” one other adviser stated.
The deal was “not existential” for Sidara, the individual added.
“After they felt they weren’t being handled with sufficient respect, it made it simpler to stroll away,” the individual stated.
Wooden Group’s issues additionally mirror wider challenges for its house area.
Melfort Campbell, an entrepreneur and veteran of the North Sea oil business, described Wooden as “vastly emblematic” of Aberdeen, saying its “core home-based business” within the North Sea had “dried up”.
Larger power taxes have undermined investor urge for food, fuelling fears of a mind drain amongst Aberdeen’s government and company base, as the controversy rages over new drilling for fossil fuels.
Reflecting widespread native anger at successive governments’ dealing with of the sector, Campbell stated: “It’s been minimize off on the knees for political expediency.”
Scotland’s highest civil courtroom, the Court docket of Session, in January dominated that two of the few offshore UK oil and gasoline developments nonetheless being thought-about had been granted their consents incorrectly as a result of their downstream emissions weren’t thought-about. The UK authorities will now must rethink whether or not they can go forward.
With roughly 4,500 of its 35,000 world work drive based mostly in Aberdeen, Wooden accounts for about one in 10 of north-east Scotland’s oil and gasoline jobs.
From the moribund housing market to empty shops on Aberdeen’s once-grand Union Road, residents really feel that the town has, in contrast to in earlier financial cycles, not benefited from the revival of the oil worth for the reason that 2014 crash.
Sir Ian, now 82, can nonetheless generally be seen driving across the “Granite Metropolis” in an Aston Martin sports activities automobile. He’s engaged on philanthropic ventures round post-oil innovation and schooling.
His final company hurrahs had been the 2011 sale of Wooden’s properly assist division to Normal Electrical for £1.75bn and the £600mn acquisition of rival PSN in 2010.
Round that point, it was spending about £200mn a 12 months on principally bolt-on acquisitions. That “gradual, regular, however protected” method modified with the £2.2bn acquisition of Amec Foster Wheeler in 2017, in keeping with Mark Wilson, head of European power analysis for funding financial institution Jefferies.
“The corporate has by no means actually been the identical since,” he stated.
The massive takeover supplied diversification into new sectors, reminiscent of renewables and civil engineering. However it got here with authorized liabilities, together with a corruption settlement. Web debt additionally jumped from $350mn in 2016 to $1.7bn in 2017. The most recent replace put common internet debt at $1.1bn.
“The reality is that they have struggled to get it down, even with asset gross sales,” Wilson stated of the debt. “There’s something within the enterprise . . . that retains on producing money outflow annually.”
Wooden Group declined to reply to questions on its latest efficiency.
Chief government Ken Gilmartin in February claimed he had laid out “a really clear path to optimistic free money circulation in 2026.”
Buyers are prone to be cautious about efficiency after a number of earlier guarantees of an imminent turnaround. It had been a “horror story” stated one fund supervisor stated. “They hold discovering new losses, taking extra writedowns.”
For the speedy future, nonetheless, the renewed Sidara talks are crucial to Wooden Group’s future.
One individual near Sidara stated the corporate, based within the Nineteen Fifties by 4 college professors in Beirut, had a “sturdy strategic conviction” about Wooden.
The 2 firms shared related enterprise outlooks, with a give attention to “individuals and purchasers”, the individual stated.
One other individual, who insisted Sidara had no intention of shifting Wooden out of Aberdeen, stated Wooden had experience in each legacy and new power industries.
Each agreed there could be challenges clarifying any excellent governance points and incentivising workers to remain.
The 2 sides had been deep in late-night talks in an Aberdeen lodge final summer time, just for the deal to break down as Center Japanese tensions rose forward of Israel’s offensive in opposition to Lebanon in late August.
But business observers in Aberdeen hope, on the premise of the understanding solid between the 2 teams final 12 months, that Sidara may revive an organization they regard as essential to the realm.
One stated there have been “huge alternatives” for many years to return for the corporate, together with offshore wind, gasoline manufacturing, properly decommissioning, carbon seize and storage and hydrogen manufacturing.
Robert Gordon College’s de Leeuw stated Wooden was “a microcosm” of the oil and gasoline business within the metropolis.
“If Wooden is busy, the business is busy,” he stated. “They’re the early warning radar.”
Extra reporting by Emma Dunkley
