PETROFAC
ANNOUNCES
IN-PRINCIPLE AGREEMENT ON FINANCIAL
RESTRUCTURE
Petrofac today announces that it has reached in-principle
agreement with certain of its key stakeholders on the framework for
a comprehensive financial restructure to strengthen the Group’s
financial position and better position it to deliver on its
strategy.
The proposed financial restructure comprises:
-
New
funding: new long-term
funding underwritten by an ad hoc group of senior secured
noteholders in line with previous announcements, as well as
additional equity financing expected to be sourced from new and
existing investors,
to support operational
liquidity.
-
Deleveraging:
the conversion of the majority of the Company’s existing debt into
equity, through a Court approved restructuring process, resulting
in the significant dilution of the existing shareholders, the
extent of which is still to be agreed.
-
Client
support: alternative
arrangements with certain key clients to meet the performance
security requirements, in lieu of performance guarantees, to
protect key contracts in the Group’s backlog, releasing a
significant amount of retentions to Petrofac.
-
Guarantees: reduced guarantee requirement of
approximately US$100 million of new performance security for a
contract awarded in 2023, to be secured through either a new
performance bank guarantee or alternative arrangements.
In-principle agreement has been reached with stakeholders
including the ad hoc group of senior secured noteholders
(representing approximately 47% of the outstanding notes, the “Ad
Hoc Group”) and the clients referred to above, whose contracts
represent a majority of the E&C backlog and pipeline of
opportunities.
The Group is also progressing discussions on the proposed
financial restructure with its bank lending group and its two
largest shareholders (representing approximately 34% of the
ordinary share capital of Petrofac) who remain supportive of the
Group’s efforts in strengthening its financial position.
The financial restructure would ensure performance security
requirements are met for Petrofac’s existing backlog, strengthen
its balance sheet and provide a capital structure and improvement
in liquidity which will support the Group in executing its order
book and capturing future growth opportunities. It would also
provide a runway for a subsequent gradual improvement in access to
guarantees for new EPC contracts on normal commercial
terms.
The in-principle agreement is non-binding and the elements of
the proposed financial restructure are inter-conditional and
subject to completion of terms and conditions (including the
resolution of certain historical liabilities of the Group to the
satisfaction of the Ad Hoc Group and the Company’s other secured
creditors). As previously disclosed, implementation of the proposed
financial restructure is subject to reaching agreement with the
Company’s lenders, the passing of certain shareholder resolutions
and the sanction of the Court.
The Board and management continue to work constructively with
the Company’s creditors, key clients and other stakeholders to
conclude due diligence and agree and finalise terms and conditions
of the financial structure, as well as to secure the necessary
equity and debt funding and performance
guarantees.
Since commencing the review of the Company’s strategic
options in December 2023, the Directors have undertaken a thorough
evaluation of alternative options available to the Company and are
of the view that this financial restructure provides the best
available outcome for the Company and for its
stakeholders.
The Group continues to closely manage its financial and
commercial payment obligations, and to rely on forbearance granted
by its creditors, as previously communicated. The Group’s ability
to implement the financial restructure is not
guaranteed.
The Company aims to announce a lock-up agreement with final
terms in the coming weeks. The Court process is expected to take
approximately two months from the lock-up agreement.
The Company anticipates publishing its interim financial
results for the six-month period ended 30 June 2024 on Monday 30
September 2024. The attention of investors is drawn to the
Company’s previous market announcements.
René Médori, Chairman, said:
“Whilst we have not yet reached the
finish line, this is a significant step towards securing a deal
with creditors which will materially reposition Petrofac with a
stronger balance sheet and improved liquidity.
“The Board has explored in great
depth the options to secure a strong future for the Group and
today’s announcement follows months of extensive
negotiations. We recognise the roles each of our
stakeholders are playing to deliver this critical next step for the
business. On behalf of the Board
and our thousands of people around the world, I would like to
reiterate our gratitude for the continued support of our
shareholders, clients and creditors at this important
time.”
Tareq Kawash, Group Chief Executive, said:
“This in-principle agreement with
our stakeholders demonstrates their confidence in the business, the
strength of our team and delivery capabilities. There is of course still work to do and a great
number of our people are working hard behind the scenes to progress
the steps outlined in today’s announcement, whilst continuing to
make progress in closing out legacy contracts and collecting
historical working capital. E&C’s new backlog is performing
well and Asset Solutions has secured more than US$1 billion in new
work this year. My thanks to our team and to all of our external
stakeholders for their efforts in seeking to deliver a more
positive future for Petrofac.”
ENDS
For further information contact:
Petrofac:
James Boothroyd,
Head of Investor Relations
James.boothroyd@petrofac.com
Sophie Reid,
Group Director of Communications and Culture
Sophie.reid@petrofac.com
Teneo (for Petrofac):
+44 (0) 207 353
4200
petrofac@teneo.com
NOTES TO EDITORS
Petrofac
Petrofac is a leading international service provider to the
energy industry, with a diverse client portfolio including many of
the world’s leading energy companies.
Petrofac designs, builds, manages and maintains oil, gas,
refining, petrochemicals and renewable energy infrastructure. Our
purpose is to enable our clients to meet the world’s evolving
energy needs. Our four values - driven, agile, respectful and open
- are at the heart of everything we do.
Petrofac’s core markets are in the Middle East and North
Africa (MENA) region and the UK North Sea, where we have built a
long and successful track record of safe, reliable and innovative
execution, underpinned by a cost effective and local delivery model
with a strong focus on in-country value. We operate in several
other significant markets, including India, South East Asia and the
United States. We have 8,500 employees based across 31 offices
globally.
Petrofac is quoted on the London Stock Exchange (symbol:
PFC).
For additional information, please refer to the Petrofac
website at www.petrofac.com