Petrofac could exchange a ‘significant proportion’ of its debt for equity as part of a rescue package, the oilfield services group said on Friday.
The London-listed firm is in talks with lenders and investors on ways to restructure its debt and receive further investment, while it negotiates with prospective buyers regarding the disposal of non-core assets.
As it told shareholders in December, the company is seeking to bolster its balance sheet and short-term liquidity, and receive bank guarantees.
Potential deal: Oilfield services firm Petrofac said it could exchange a ‘significant proportion’ of debt for equity as part of a rescue package
Petrofac has struggled in recent years with soaring losses resulting from cost overruns, write-downs on legacy contracts, payment delays, and bribery scandals.
For the six months ending June 2023, the group reported a $165million net loss compared to a $39million loss in the same period last year.
Hedge funds have made Petrofac the most shorted stock on the London Stock Exchange, with 11.2 per cent of the firm’s shares currently in a short position.
As a result, Petrofac shares have plunged by nearly two-thirds in the past year, while their value has declined by approximately 94 per cent since the beginning of 2020.
The group’s shares were the FTSE All-Share Index’s biggest faller in early Friday trading, dropping 30.1 per cent, or 10p, to 23.3p.
However, Petrofac has continued winning multiple new deals, including a contract extension with ONEgas West for work in the North Sea and a three-year deal from Turkmengas to support operations at the Galkynysh Gas Field in Turkmenistan.
These followed an £11.4billion offshore-wind framework agreement granted last year by Dutch-German electricity grid operator TenneT.
These contracts have helped boost the firm’s order backlog to $8billion, having been worth $3.4billion at the end of 2022.
It told investors: ‘While the company continues to face challenges in securing new performance guarantees, it is progressing discussions with credit providers and clients to find solutions with respect to the guarantees required for its recent contract awards.’
‘The discussions with lenders and other stakeholders continue at pace and further announcements will be made as appropriate.’
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