Engineering giant Babcock International has denied a report from a major news outlet that the firm will take a £100million impairment charge on its North Sea helicopter business.
In 2014, Babcock bought Avincis, the parent firm of Aberdeen-based Bond Offshore, for £1.6bn, just before the oil price crash.
A report from Sky News states Babcock will take a writedown, estimated to be around £100m, on the Avincis business during its financial results on Wednesday as it aims to repair relations with investors.
However, Babcock has this morning issued a statement that, although it is reshaping its oil and gas business, it does not expect “material net cash costs”.
Sky News’ report followed a research note from a firm called Boatman Capital making a series of allegations on Babcock’s finances and management.
Babcock, whose share price has dropped nearly 25% over the last year, said much of the content was “false and malicious”.
The engineering company issued a statement today on the stock market, responding to the news report.
It said: “Babcock, the engineering services company, would like to provide clarification following a report by Sky News regarding exceptional items likely to be included in the Group’s half year results announcement on 21 November 2018.
“As indicated to the market in its most recent Trading Update of 19 September 2018, Babcock is currently undertaking a programme to strengthen the Group by exiting a number of small, low-margin businesses, including the Appledore shipyard, and is reshaping its oil and gas business.
“We announced at that time that we would provide an update on these activities at our half year results. Whilst the exact impact of these actions has yet to be determined by the Board, we do not expect the net cash costs to be material.”
The Avincis business was heavily affected by the drop in the oil price, leaving much of the fleet under utilised.
Following the acquisition, it was renamed Babcock Mission Critical Services.