American energy conglomerate General Electric (GE) has launched a programme to sell its remaining 36.6% stake in its oil field services subsidiary Baker Hughes within three years.
GE plans to use the proceeds from the sale to clear some of its debts.
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The latest announcement comes in the wake of a challenging Q2 2020, which saw the US conglomerate post a net loss of $2.13bn from industrial operations.
GE said that the programme is aimed at fully monetising its position in the oil industry.
It will enable the American conglomerate to divest its shares at a price near the volume-weighted average price of Baker Hughes’ shares over an extended time period.
In July 2017, GE completed the merger of its oil and gas business with Baker Hughes as part of a deal valued at $7.4bn. This merger transaction saw GE shareholders taking a 62.5% stake in the enlarged firm, with the original Baker Hughes shareholders holding the remaining stake of 37.5%.
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By GlobalDataCommenting on the Q2 2020 results, GE Chairman and CEO H Lawrence Culp said: “The GE team remains focused on protecting the safety of our people, serving our customers and communities, and preserving our strengths, and I want to thank all of my colleagues for their tireless efforts. We had a very challenging second quarter that we met head-on, executing well operationally while we took actions to further de-risk our company.
“Our earnings performance was impacted by the ongoing impact of Covid-19 on our businesses, but industrial free cash flow was better than our expectations and previously communicated range.”
Baker Hughes recently announced that it suffered a $201m loss in Q2 2020 amid the Covid-19 pandemic and its impact on oil and other commodity prices. Revenue from the company’s oilfield services business plunged 26% to $2.41bn, while total revenue fell 21% to $4.74bn in the quarter that ended in June.
