Summary
Baker Hughes Company (BKR) announced a significant development on December 29, 2022, through a binding term sheet executed with General Electric (GE) and related entities. This agreement outlines the terms for GE to divest its ownership in Baker Hughes' operating subsidiary, Baker Hughes Holdings LLC (BHH LLC), through an exchange of units. The term sheet also addresses the settlement of certain disputes and the termination of the existing Tax Matters Agreement (TMA) between the parties. Key to investors, this move signifies a complete separation from GE and aims to resolve outstanding issues, including a $21 million non-refundable payment made by Baker Hughes to GE as part of the settlement. The parties are working towards finalizing definitive agreements by February 15, 2023. This event is crucial for Baker Hughes as it potentially streamlines its corporate structure and eliminates ongoing entanglements with its former parent.
Key Highlights
- 1Baker Hughes and GE have entered into a binding term sheet to finalize GE's exit from Baker Hughes' ownership structure.
- 2GE will exchange all its units in Baker Hughes Holdings LLC, eliminating its equity stake.
- 3The agreement includes the settlement of disputes and termination of the Tax Matters Agreement (TMA) dated July 3, 2017.
- 4Baker Hughes made a $21 million non-refundable payment to GE as a net settlement of claims under the TMA.
- 5Definitive agreements are expected to be finalized on or before February 15, 2023, with an effective date coinciding with the term sheet execution.
- 6The termination of the TMA and resolution of disputes are effective as of the date of the term sheet, except as otherwise provided.