REG-Petrofac Limited PETROFAC ANNOUNCES IN-PRINCIPLE AGREEMENT ON FINANCIAL RESTRUCTURE

PetrofacAnnouncement

27/09/2024 18:00

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   Petrofac Limited ( PFC)
   PETROFAC ANNOUNCES IN-PRINCIPLE AGREEMENT ON FINANCIAL RESTRUCTURE

   27-Sep-2024 / 17:50 GMT/BST

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   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

    1 James.boothroyd@petrofac.com

    

   Sophie Reid, Group Director of Communications and Culture

    2 Sophie.reid@petrofac.com

    

   Teneo (for Petrofac):

   +44 (0) 207 353 4200

    3 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
    4 www.petrofac.com

    

    

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   Dissemination of a Regulatory Announcement that contains inside
   information in accordance with the Market Abuse Regulation (MAR),
   transmitted by EQS Group.
   The issuer is solely responsible for the content of this announcement.

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   ISIN:          GB00B0H2K534
   Category Code: MSCU
   TIDM:          PFC
   LEI Code:      2138004624W8CKCSJ177
   Sequence No.:  349705
   EQS News ID:   1997781


    
   End of Announcement EQS News Service

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References

   Visible links
   1. mailto:James.boothroyd@petrofac.com
   2. mailto:Sophie.reid@petrofac.com
   3. mailto:petrofac@teneo.com
   4. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=9fe21fdf68d48cc06116e9fe9587a1c8&application_id=1997781&site_id=reuters~~~787b94c3-8286-43cc-98b3-26b1dc52d810&application_name=news


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