Babcock weighs oil and gas aviation services disposal

Babcock , the engineering services group, is sounding out buyer interest for its oil and gas aviation services business, according to several advisors familiar with the company.

Deliberations remain at an early stage, one of the advisors said. However, a sale is the most likely option, all of them noted.

A move to sell the business, which provides helicopter crews and supplies to offshore oil rigs, comes after Babcock attributed in its annual report a slump in flying levels to a deteriorating oil and gas aviation market, leading to an asset impairment writedown of GBP 22.2m for FY20.

The company also recognised a “significant” goodwill impairment charge to “reflect [its] expectations of the oil and gas market and the deterioration in the business since the acquisition of Avincis in 2014”.

Babcock paid GBP 920m and took on GBP 700m of Avincis’s debt in an acquisition that was billed by then Chief Executive Peter Rogers as providing the warship builder with a “strong growth platform” for expansion and value creation.

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by Ryan Gould, Georgina Barnard and Amy-Jo Crowley in London