ShawCor announces expected impairment charge

ShawCor Ltd has announced that it expects to incur an after tax impairment charge of up to approximately US$80 million, relating to the goodwill and intangible assets of the Socotherm Gulf of Mexico coating facility in Channelview, Texas, and the carrying value of Socotherm's 50% joint venture interest in Venezuela. The charge results from recently conducted annual impairment testing under IFRS of the carrying value of ShawCor's long lived assets. The final amount of this impairment charge is expected to be recorded in the fourth quarter.

The write-down of goodwill and intangible assets associated with the Socotherm Gulf of Mexico facility is based primarily on two factors: anticipated market developments in the Gulf of Mexico including the likelihood of project delays as a result of the recent global decline in oil prices; and the company's intention to shift non-Gulf of Mexico production from the Channelview, Texas, operations to Pozzallo, Italy, following the successful launch of production at the Pozzallo facility, which is better positioned logistically to service project activity in Europe, the Middle East and Africa. The write down of the joint venture interest in Venezuela is primarily the result of the accelerating devaluation of the local currency in Venezuela.

While the maximum amount of the write-down is not expected to exceed US$80 million, there can be no assurance as to the amount of any write-down that may be taken. Any write-down will represent a non-cash charge that will not impact the company's ability to generate revenue from its operations in the Gulf of Mexico or Venezuela.

Adapted from press release by Rosalie Starling

Read the article online at: https://www.worldpipelines.com/business-news/23122014/shawcor-announces-expected-impairment-charge-1136/