TORONTO, Dec. 22, 2014 (GLOBE NEWSWIRE) -- ShawCor Ltd. (TSX:SCL) announced today that it expects to incur an after tax impairment charge of up to approximately $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: (i) 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 (ii) 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 $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.
ShawCor Ltd. is an energy services company specializing in products and services for the pipeline and pipe services and the petrochemical and industrial segments of the oil and gas industry. The company operates through nine divisions with over ninety manufacturing and service facilities located around the world.
This news release contains forward-looking information within the meaning of applicable securities laws. This forward looking information is based on assumptions, estimates, and analysis made in the light of the company's experience and its perception of trends, current conditions and expected developments, as well as other factors that are believed by the Company to be reasonable and relevant in the circumstances. Forward looking information involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from those predicted, expressed, or implied by the forward-looking information. The forward looking information is provided as of the date of this news release and the Company does not assume any obligation to update or revise the forward looking information to reflect new events or circumstances, except as required by law.