Petrofac mulls equity issuance as it battles to stay afloat
Oil and gas exploration company Petrofac currently remains "in discussions" with its lenders over restructuring its massive debts, suggesting options such as exchanging equity in the business.
In a stock exchange notice today, the London-listed company, which employs 8,500 people worldwide, provided no clear updates on it debt but said “all options remain under consideration” about solving the problem.
“[Petrofac] also continues to be in discussion with prospective investors and certain major shareholders in relation to potential further investment in the company and remains in negotiations with prospective purchasers regarding the sale of non-core assets,” it added.
At the end of last year, various brokers such as JP Morgan began flagging balance sheet concerns for the company, noting that it had $250m (£200m) in debt due to mature in October 2024.
At the end of December, the group said it would end 2023 with net debt of around $600m (£480m).
Berenberg placed the firm under review as a result, removing its rating and price target and warning that “in a worst-case scenario, Petrofac may be forced to renegotiate its financing agreements, potentially leaving shareholders significantly diluted”.
The firm currently has a $8bn (£6.4bn) backlog and is strongly focused on ensuring it can fulfil it.
Petrofac’s stock price has collapsed as a result of the problems, halving in the last six months, while leading it to become the most shorted stock on the FTSE.
In the announcement today, the firm said it was focused on managing the group’s payment obligations to make sure it can meet the provisions required for its recent contract awards.
“The discussions with lenders and other stakeholders continue at pace and further announcements will be made as appropriate,” the company said.
