UK's Petrofac says still grappling with challenging contracts, shares tumble (updated)

Petrofac

12/04/2024 08:23

(Adds background and details)
       April 12 (Reuters) - Oilfield services provider Petrofac
 PFC.L  said on Friday it was still facing challenges in
securing performance guarantees for new contracts and that it
remains in talks with lenders to restructure its debt in
exchange for equity.
    Performance guarantees refer to a commitment to honour the
terms of the deal.
    
    WHY IT'S IMPORTANT
    After a boom in orders due to high oil prices in 2022,
Petrofac has been struggling with payment delays and cost
overruns at its engineering and construction unit.
    Its shares have suffered -- first due to a UK Serious Fraud
Office investigation and then due to a string of profit warnings
related to legacy contracts. The stock has dropped 54% over the
last 12 months.
    
    MARKET REACTION
    Petrofac's shares sank 22% to 26.6 pence in early trading on
Friday, bringing it among the top losers across London equities.
    
    CONTEXT
    In order to strengthen its balance sheet and improve
liquidity, Petrofac is mulling the sale of its non-core assets
and said on Friday it remains in discussions with major
shareholders to further invest in the company.
    "All options remain under consideration," Petrofac said.
    The London-listed firm has also blamed delays in advance
payments on new contracts for its rising debt levels, which led
to a cash flow warning in December.
    
    BY THE NUMBERS
    Petrofac's net debt was $584 million as of June 30 and the
company expects that to have increased as of last December, when
it's full-year ended.
    It has a contract backlog of $8 billion.
    
    WHAT'S NEXT
    Full-year results are expected to be announced in April.
    

 (Reporting by Eva Mathews in Bengaluru; Editing by Sonia Cheema
and Savio D'Souza)
 ((Eva.Mathews@thomsonreuters.com;))