Fugro, a Dutch offshore services provider, announced on Monday (May 25) the receipt of US$17.3 million from the sale by Global Marine Group of a 30% stake in Huawei Marine Networks (HMN) to Hengtong Optic-Electric Co Ltd (Hengtong).
Fugro and US-based HC2 were the two major stakeholders of Global Marine Group (“GMG”), with 23.6% and 73% stake in GMG respectively.
GMG is a market leader in offshore engineering and is recognized as a high quality, independent strategic partner across multiple sectors.
In October 2019, GMG sold to Hengtong Optic-Electric Co Ltd (Hengtong) its 49% stake in Huawei Marine Networks Co., Limited (HMN) at approximately $140 million, which valued HMN at $285 million. Under the agreement, GMG will sell 30% (approximately $85 million) of HMN to Hengtong at closing which was scheduled in the first quarter of 2020, and retain a 19% interest in HMN under a two-year put option agreement at the greater of the same equity value ($285mm) or fair market value. Hengtong also purchased Huawei’s full 51% stake in HMN and will own 81% of HMN upon the closing of both sales, and 100% upon the exercise of GMG’s put option.
Fugro’s stake in HMN values at approximately USD 33 million. Initial sale of 30% stake in HMN represents a value of approximately USD 20 million for Fugro.
In Januray 2020, J.F. Lehman & Company (JFLCO), a US private equity firm focused exclusively on the aerospace, defense, maritime, government and environmental sectors, acquired 100% stake in Global Marine Group (excluding GMG's 49% stake in HMN) for US$250 million. And the deal was closed in early March 2020.
In addition to the receipt of US$17.3 million from the sale of a 30% stake in Huawei Marine Networks (HMN) to Hengtong, Fugro received US$37 million in the first quarter of 2020 from the divestment of its 23.6% stake in Global Marine Group to J.F. Lehman & Company, 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.
The remaining 19% of Huawei Marine Networks that is under a two-year put-option agreement is expected to generate another $10-15 million for Fugro
The proceeds will be utilized to reduce Fugro’s outstanding debt position.