Halliburton plans KBR IPO, says probes resolved
Fri Jan 27, 2006 2:13 PM ET
By Matt Daily
HOUSTON (Reuters) - Halliburton Co. (HAL.N: Quote, Profile, Research) on Friday said it planned to file for an initial public stock offering of its engineering and construction arm KBR and said billing disputes over fuel and food service charges in Iraq had been resolved.
KBR's revenue in 2005 totaled $10.9 billion, or 52 percent of Halliburton's total.
Halliburton said it planned to float about 20 percent of KBR, formerly called Kellogg Brown & Root, and said it would make a filing after it issued its 10-K annual regulatory filing to the U.S. Securities and Exchange Commission.
"We believe the IPO market in general and the public market for engineering and construction companies in particular is very attractive," Dave Lesar, Halliburton's president, chairman and chief executive officer, told a conference call.
Halliburton, the world's second-largest oil services company, had previously said it was considering a sale of KBR or a public listing, but it said in October an IPO was more financially appealing.
The company could still sell off some of KBR's operations to interested parties without affecting that listing, Chief Financial Officer Cris Gaut said.
On Thursday, Halliburton reported net income of $1.1 billion, or $2.08 per share, compared with a year-earlier loss of $203 million, or 46 cents per share.
Shares in Halliburton rose nearly 8 percent to a record high at $81 per share in trading on the New York Stock Exchange, outpacing broader gains in the oil service sector, before backing off to $78.23, up $3.08, in afternoon dealings.
IRAQ AUDITS
Lesar also said the audits concerning potential overcharges for KBR's dining services and fuel supply costs in Iraq had been wrapped up in 2005.
"Both of these matters were fully resolved during 2005, resulting in our government and infrastructure division recognizing additional income for award fees," he said.
Halliburton, which was formerly headed by Vice President Dick Cheney, has been criticized for its work in Iraq, including for some contracts that were awarded on a "no-bid" noncompetitive
basis.
A top U.S. Army procurement officer, Bunny Greenhouse, last year described Halliburton's deals in Iraq as "contract abuse" and said auditors had flagged over $1 billion in potential overcharges.
The company said the remaining audits of four task orders being conducted by the military had been resolved, adding to the six task order issues that the company said in October had been resolved.
The Pentagon did not immediately respond to requests seeking comment.
Halliburton has said that criticism of its work in Iraq was politically motivated and that company's disputed fuel charges had been fully reimbursed.
"We haven't had much media coverage because I suspect it was positive news for us," Lesar said.
KBR had reported about $15.4 billion in revenues from its operations in Iraq since the U.S. invasion in 2003.