REG-Petrofac Limited Petrofac Limited: Petrofac makes Board appointment and provides business update

PetrofacAnnouncement

04/12/2023 07:00

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   Petrofac Limited ( PFC)
   Petrofac Limited: Petrofac makes Board appointment and provides business
   update

   04-Dec-2023 / 07:00 GMT/BST

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   Press Release

    

   4 December 2023

                 This announcement contains inside information

                                        

                        PETROFAC MAKES BOARD APPOINTMENT
                          AND PROVIDES BUSINESS UPDATE

   Petrofac Limited (“Petrofac”  or “the  Company”) announces  that Aidan  de
   Brunner has today joined  the Company as  a Non-Executive Director.  Aidan
   brings to  Petrofac over  20 years  of board,  management, investment  and
   financial  advisory  experience   gained  across  a   variety  of   global
   businesses.

   As the Group pivots  to the execution  of the new  contracts won in  2023,
   Aidan will commit  a significant  portion of  his time  to supporting  the
   Board for  a  limited  period.  He  will  drive  engagement  with  finance
   providers, investors  and  other  stakeholders  in  an  active  review  of
   strategic  and  financial  options  to  deliver  on  Petrofac’s  potential
   following its most successful period for new awards in many years. 

   Strategic and financial options to strengthen balance sheet

   The Board is examining a range of strategic and financial options with the
   objective  of  materially   strengthening  the  Company’s balance   sheet,
   securing bank guarantees and improving short-term liquidity. A key aim  of
   this review  is  to  protect the  interests  of  Petrofac’s  shareholders,
   creditors and employees while  the Group continues its  focus on safe  and
   effective delivery for its clients.

    

   Management has been making progress  in organic actions to unwind  working
   capital, collect  receipts on  ongoing  and new  contracts and  to  unlock
   long-outstanding  commercial  settlements.  In  addition,  Management   is
   considering the  sale  of non-core  assets,  and is  actively  engaged  in
   discussions with financial investors to take a non-controlling position in
   certain other components of the business portfolio. As part of an  overall
   plan, these transactions  would result  in a material  improvement on  the
   balance sheet.  The  Company is  also  exploring potential  new  financial
   options across all its classes of capital. 

    

    

   Business update

   Operationally, as demonstrated by its backlog growth, the Group  continues
   to deliver  well  for  its  clients, and  has  a  healthy  Group  pipeline
   scheduled for award in the period to the end of 2024.

   The full year free cash flow  guidance1 provided with our interim  results
   was based, in part, on unwinding historical working capital and collecting
   advance payments on the new contracts secured in 2023. While the Group has
   made progress in  reaching contractual settlements  and unwinding  working
   capital, given delays in securing advance payment guarantees, it no longer
   expects to receive these advances before the year-end. Consequently, it no
   longer expects to meet the guidance previously provided for full year cash
   flow.

   The  Group  has  continued  to  maintain  liquidity  above  its  financial
   covenant2 and will  provide further details  in its trading  update on  20
   December 2023.

   Update on performance guarantees

   As noted in Petrofac’s H1 results, it is an industry standard  contractual
   requirement to provide Performance  Guarantees for EPC contracts.  Banking
   and surety  market  appetite for  the  provision of  these  guarantees  in
   support of the contracts won by Petrofac has reduced, resulting in  delays
   in their provision. Petrofac remains in active discussions with its credit
   providers to secure the  guarantees on the new  contracts as well as  with
   the clients of these new contracts. The measures being taken to strengthen
   the balance sheet are, in part, designed to secure future guarantees.

   Group Chief  Executive  Tareq  Kawash  commented:  “Petrofac’s  underlying
   business is robust with material growth in our backlog from  approximately
   US$5.5 billion in new awards in new and traditional energy this year. This
   demonstrates our competitive strength and long-term potential. To  deliver
   on this, we are  working hard to  address short-term liquidity  challenges
   and strengthen the financial position of the Group. I am grateful for  the
   continued efforts of our people, and the support of our clients and  other
   stakeholders, as we work to deliver a positive future for Petrofac.” 

   The Chairman  René  Médori  commented:  “The Board  is  fully  focused  on
   reviewing a range of strategic  and financial options with the  objectives
   of strengthening the Group’s balance sheet and protecting the interests of
   all our stakeholders. The appointment  of Aidan de Brunner reinforces  the
   skills and experience of the Board in support of these efforts.”

   Petrofac will issue its pre-close trading update on 20 December 2023.

    

   Notes

   In accordance with Listing  Rule 9.6.15, the  information to be  disclosed
   pursuant to  Listing Rule  9.6.13, are  that Aidan  de Brunner  is also  a
   non-executive director of  Babylon Holdings  Limited, a  company that  was
   previously  listed  on  the  NYSE.  There  are  no  other  details  to  be
   disclosed. 

    

   1 Free cash flow guidance provided  with the interim results was that,  at
   Group level, we expected cash flow to be broadly neutral in 2023.

    

   2 The  financial covenant  for  liquidity is  that the  Group’s  liquidity
   (excluding cash  held in  joint operations)  shall exceed  US$75m at  each
   month end.

   ENDS

    

   For further information contact:

    

   Petrofac:

   James Boothroyd, Head of Investor Relations

    1 James.boothroyd@petrofac.com

    

   Sophie Reid, Group Director 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:  BOA
   TIDM:           PFC
   LEI Code:       2138004624W8CKCSJ177
   OAM Categories: 2.2. Inside information
   Sequence No.:   289297
   EQS News ID:    1788035


    
   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=1788035&site_id=reuters8&application_name=news


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