Halliburton will hive off KBR unit
Sheila McNulty, Houston
January 30, 2006
HALLIBURTON, the world's largest diversified energy
services, engineering and construction company, says
it is ready to spin off and list its KBR unit, which
is the US's biggest private contractor in Iraq, and
may also consider selling some pieces of KBR outright.
The decision to list 20 per cent of KBR, which had
been expected, comes as Halliburton reported the best
annual figures in its 86-year history. It earned
$US2.4 billion ($3.2 billion), or $US4.54 per share,
in 2005, compared with a full-year net loss of $US1
billion, or $US2.22 per share, in 2004.
Its overall gains were driven not only by KBR but also
its Energy Services Group, which has benefited from
increased use of its crews and assets amid an industry
scramble for oil and gas resources in the high-priced
Halliburton is eager to separate itself from KBR,
which, despite bringing in billions of dollars from US
military contracts in Iraq, has plagued the parent
company with controversy since the war began.
Not only was KBR accused of overcharging for services,
but critics said KBR was being favoured by the US
Government for contracts because US Vice-President
Dick Cheney used to run Halliburton.
Even though Halliburton has denied any wrongdoing, the
controversy has dogged it. The company had to wait to
hive off KBR because the unit was caught up in a
bankruptcy restructuring as part of the company's $US4
billion asbestos settlement.
Halliburton president, chairman and chief executive
Dave Lesar said Halliburton planned to file for an
initial public offering for KBR soon after filing its
10-K financial form with regulators, which should be a
matter of months.
"We believe the IPO market in general, and the public
market for engineering and construction companies in
particular, is very attractive, and a public valuation
of KBR would benefit Halliburton's stock price, Mr
Valuation multiples of publicly traded engineering and
construction firms are currently very favourable.