Baker Hughes Outlines Plans To Reduce Costs; To Buy Back $1.5 Bln Shares

(RTTNews) - Baker Hughes Inc. (BHI), following the termination of its merger agreement with Halliburton Co. (HAL), outlined Monday a series of actions to reduce costs and simplify its business, enhance its commercial strategy, and optimize its capital structure.

Baker Hughes is taking immediate steps to remove significant costs that were retained in compliance with the former merger agreement. The initial phase of the cost reduction efforts is expected to result in $500 million of annualized savings by the end of 2016.

The company also is taking actions to optimize its capital structure to achieve the right balance between returning capital to shareholders.

As part of these plans, the company intends to buy back shares totaling $1.5 billion and debt totaling $1 billion, from proceeds of the $3.5 billion breakup fee. In addition, the company intends to refinance its $2.5 billion credit facility, which expires in September 2016.

Baker Hughes Chairman and CEO Martin Craighead said that the company is well positioned to focus on the development of products that lower costs and maximize production for operators in the oil and gas industry.

Craighead said. "As we implement these changes, we remain focused on running the business efficiently while capitalizing on our strengths as a product innovator to create new growth opportunities.