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Petrofac shares suspended amid refinancing deal

:Petrofac
Petrofac has agreed a refinancing deal

Petrofac shares will be suspended from 1 May after the company delayed the publication of its full-year results by a month to 31 May.

Shares in the company closed 34.08% (7.6p) lower at 14.7p. as a group of noteholders offered the struggling UK oilfield services provider a $300m credit line to refinance its balance sheet.

In a statement, the Aberdeen-based energy services provider told investors: “Although the audit is substantially progressed, the company and its auditor require additional time to complete the annual report. “

The financial restructuring is dependent upon, amongst other things, the company securing performance guarantees, and would require the conversion of a significant proportion of the group’s existing debt to equity.

It said good progress is also being made with non-core asset disposals, with non-binding offers received for the group’s share in a contract in Malaysia, the process for which could be completed in Q3 2024.

In its trading update on 20 December, the company highlighted a risk in relation to the timing of the negotiations on the Thai Oil Clean Fuels project.

Petrofac and its joint venture partners remain engaged with its client in relation to the reimbursement of additional project costs. At the time of reporting the full year 2023 results, management does not expect to have progressed discussions sufficiently to recognise the expected outcome of the negotiations in its accounts.

As a result, the company expects to recognise an incremental loss in its E&C division of approximately US$130 million for 2023.

Net debt at 31 December 2023 was $583 million, which was lower than guided on 20 December and in line with the interim results, reflecting the continued efforts of the group to manage its payment obligations.  

René Médori, chairman, said: “The board and management are focused on arriving at a comprehensive refinancing solution as quickly as possible. We are encouraged by the engagement with the ad-hoc group of noteholders, which we hope demonstrates momentum in this complex process. We remain grateful to all our stakeholders for their patience and continued support of Petrofac.”

Tareq Kawash, group chief executive, said: “Operational activity continues as expected and our teams are delivering well in the initial phases of the contracts awarded in 2023.

“On the Thai Oil Clean Fuels contract, we are working closely with our client and partners to accelerate delivery of this complex project and conclude negotiations on the reimbursement of costs. While the commercial negotiations will only conclude after our full year reporting cycle, we are making progress.

“Petrofac has a large order book of high-quality projects, strong market positions and compelling future opportunities which are evident from the recently announced awards. We are working to put the performance guarantees and the right capital structure in place, in order to deliver on this potential.”

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