Aegion Corporation has reportedly divested The Bayou Companies, LLC which is a wholly-owned subsidiary, to California based Altamont Capital Partners. The sale is apparently aligned with Aegion’s strategic plans that are targeted towards ensuring long-term earnings growth that is more predictable and sustainable.
Sources familiar with the matter informed that as part of the deal, Aegion has also sold off its 51% membership interest in Bayou Wasco Insulation, LLC. Referring to the transaction details, Aegion would be receiving $46 million with $38 million in cash and the remaining $8 million in a two-year fully secured loan. Further, the company is estimated to receive about $4 million, depending on the performance of the divested units, in 2019 and 2020, sources confirmed.
For the uninitiated, Bayou is hailed as a leading offshore coatings & insulation and onshore pipe coatings company, specializing in insulation for the oil and gas segment. Bayou Companies and Bayou Wasco allegedly generated a substantial income for Aegion in 2016 and 2017 owing to a massive deep-water insulation project completed in the initial part of 2017.
Separately, Aegion expects to repay outstanding debts from the cash accrued by the sale of its Corrosion Protection’s pipe coating and insulation business in Louisiana. As per projections, the sale would result in pre-tax losses of nearly $8 to $10 million.
Records indicate that to generate more sustainable income growth, Aegion had initiated several strategic actions in 2017. The company had also started a process for divesting the Australia CIPP business and as on June 30, 2018, had classified its assets and liabilities as held for sale. Aegion is supposedly planning to exit CIPP operations in Denmark as well, since the business there has been continuously underperforming, and could complete the action by the end of this year.
Market reports show that over the past six months, Aegion’s share prices have gone up by 6.3% as opposed to the industry’s fall by 7%.