REG-Petrofac Limited Petrofac Limited: Delay to publication of 2023 results, Update on restructuring and Trading Update

PetrofacAnnouncement

29/04/2024 07:15

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   Petrofac Limited ( PFC)
   Petrofac Limited: Delay to publication of 2023 results, Update on
   restructuring and Trading Update

   29-Apr-2024 / 07:01 GMT/BST

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   This announcement contains inside information for the purposes of Article
   7 of the Market Abuse Regulation (EU) 596/2014 of 16 April 2014 (MAR) as
   it forms part of domestic law by virtue of the European Union (Withdrawal)
   Act 2018.

   29 April 2024

   DELAY TO PUBLICATION OF 2023 RESULTS, UPDATE ON RESTRUCTURING AND TRADING
   UPDATE
   Petrofac today announces a delay to its audited full year 2023 results
   which it now expects to publish by 31 May 2024. The Company also reports
   the progress made with creditors on its financial restructuring and issues
   a trading update.

   Delay of full year 2023 results and temporary suspension of shares

   The Company expects a short delay in issuing its audited full year 2023
   results, which it now expects to publish by 31 May 2024. Although the
   audit is substantially progressed, the Company and its auditor require
   additional time to complete the annual report. 

   As a result, in accordance with the Financial Conduct Authority’s (FCA)
   Disclosure and Transparency Rules and Listing Rules for the publication of
   audited financial statements, the Company has engaged with the FCA, and
   trading in the Company’s shares will be temporarily suspended from 7.30
   a.m. on 1 May 2024 until its full year 2023 results are published.

   Update on Strategic and Financial Options

   As part of the Group’s ongoing financial restructuring, an ad-hoc group of
   senior secured noteholders have made a proposal to provide further credit
   to the business of up to US$300 million, comprising US$200 million of new
   funds and US$100 million of credit support to help secure performance
   guarantees for certain of its existing contracts. This non-binding
   proposal is dependent upon, amongst other things, the Company securing
   these performance guarantees, and would require the conversion of a
   significant proportion of the Group’s existing debt to equity.

   The Company is in active discussions with credit providers to obtain the
   required guarantees, which would also release over US$200 million of
   collateral and retentions, and will provide an update on the outcome of
   those discussions as appropriate.

   This development comes as the Company continues to manage its payment
   obligations to preserve liquidity whilst progressing the other components
   of the restructuring with other stakeholders.

   The Group’s upcoming payment obligations include amortisation payments due
   on the Company’s bank facilities and the coupon payment due on its senior
   secured notes on 15 May 2024.

   The Company’s lending banks have agreed to a number of rolling short term
   deferrals of contractual amortisation payments while the Company
   progresses the financial restructuring. The Company continues to engage
   with its lending banks on extending these deferrals as required.

   The Company does not expect to make the payment of the bond coupon on the
   due date of 15 May. The payment has a 30-day grace period. The ad-hoc
   group of noteholders, representing approximately 41% of the outstanding
   notes, has entered into a forbearance agreement with the Company, which
   provides an assurance that those noteholders will not take any action in
   respect of the non-payment of the coupon until at least 30 June 2024, in
   order to provide time for the Group’s financial restructuring to be
   progressed. The Company will seek to engage with other noteholders in the
   coming weeks.

   Managing these payment obligations is of critical importance to the
   Company’s ability to maintain sufficient liquidity in the short-term while
   it is working to implement the financial restructuring.

   Good progress is also being made with non-core asset disposals, with
   non-binding offers received for the Group’s share in the PM304 Production
   Sharing Contract (PSC) in Malaysia, the process for which could be
   completed in Q3 2024. Offers are in line with the value of anticipated
   cash flows (subject to oil price and oil premium assumptions) over the
   remaining term of the PSC which expires in September 2026.

   Trading Update

   In its Trading Update of 20 December 2023, 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 US$583 million, which was lower than
   guided on 20 December 2023 and in line with the interim results,
   reflecting the continued efforts of the Group to manage its payment
   obligations.  

   Asset Solutions has incurred additional costs on one of its Engineering,
   Procurement, Construction, and Commissioning (EPCC) contracts, and expects
   to report an EBIT for 2023 which could be up to US$15 million to US$20
   million lower than previously guided, pending the outcome of negotiations.

   The Group’s financial performance for the year ended 31 December 2023 is
   otherwise expected to be broadly in line with the Trading Update of 20
   December 2023.

   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.”

   ENDS

   For further information contact:
   Petrofac:
   James Boothroyd, Head of Investor Relations
    1 James.boothroyd@petrofac.com
   Sophie Reid, Group Head of Communications
    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: STR - Petrofac
   TIDM:          PFC
   LEI Code:      2138004624W8CKCSJ177
   Sequence No.:  318341
   EQS News ID:   1891167


    
   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=1891167&site_id=refinitiv&application_name=news


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