General Electric (GE) has announced plans to reduce its ownership in oil and gas company Baker Hughes, a GE company (BHGE) from 50.4% to 38.4% in a process to raise $2.7bn.
GE said that it would raise the amount through a public offering of 115 million BHGE Class A shares priced at $21.50 a share and through a private sale of $250m Class B common stock priced at $0.0001 a share.
Combined net proceeds of the offering and the repurchase programme will stand at $2.7bn or approximately $3bn assuming the full exercise of the underwriters’ option to purchase additional shares of common stock from GE.
GE Chairman and CEO Lawrence Culp said: “Reducing GE’s ownership in BHGE continues our efforts to improve our financial position by generating approximately $2.7bn in net proceeds to GE.
“This offering builds on several recent deleveraging steps we have taken and we will continue to take action in 2019 and 2020 to achieve our leverage targets.”
Upon completion of the transactions, GE and its affiliates will hold nearly 38.4% of BHGE’s voting stock. GE will no longer hold a majority stake in BHGE.
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By GlobalDataThe company also plans to continue to divest the remainder of its BHGE holdings in a timely manner.
GE said in a statement: “GE will determine the final amount of this non-cash charge, as well as the impact of deconsolidating BHGE on its 2019 outlook framework, based on information available as of the end of the third quarter, and will disclose this information when it reports third-quarter 2019 results on 30 October 2019.”
In November 2018, GE signed an agreement to divest 12% of its interest in BHGE, in order to raise $4bn to reduce debt and strengthen its balance sheet.
In a separate development, BHGE and C3.ai announced the launch of BHC3 Reliability, the first artificial intelligence (AI) software application developed by the BakerHughesC3.ai joint venture (JV).
The BHC3 Reliability machine learning models identify anomalous conditions that cause equipment failure and process upsets.
The system-of-systems approach of BHC3 Reliability is applicable to operations across all sectors of the energy value chain.
