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| Share Name | Share Symbol | Market | Stock Type |
|---|---|---|---|
| Petrofac Limited | PFC | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
|
|
|---|---|---|---|---|
| -1.24 | -5.27% | 22.30 | 16:35:26 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
|---|---|---|---|---|
| 22.96 | 22.50 | 23.30 | 22.30 | 23.54 |
| Industry Sector |
|---|
| OIL EQUIPMENT SERVICES & DISTRIBUTION |
| Announcement Date | Type | Currency | Dividend Amount | Ex Date | Record Date | Payment Date |
|---|---|---|---|---|---|---|
| 28/08/2019 | Interim | GBP | 0.1021 | 19/09/2019 | 20/09/2019 | 18/10/2019 |
| Top Posts |
|---|
Posted at 13/4/2024 22:05 by jaknife ryad123,"@jaknife can you explain how do you get the 4p figure from, you seem to be assuming that after the bond holders taking a haircut along with a fresh equity cash injection, the valuation will remain the same, as if the business will be worth the same even though it has less debt, dilution means the percentage of ownership shrinks not necessarily loss in absolute money terms, unless you are saying that 26p a share is misguided and the market is still mispricing pfc." I explained that in post 39,411 here: Yes "26p a share is misguided and the market is still mispricing PFC". But this is quite normal. If you look back at every major D4E swap you will find that it takes time for shareholders to come to terms with the situation and to realise that the position is not what they thought. It is very similar to the five stages of grief (denial, anger, bargaining, depression and acceptance: Note, for example, that just days ago, posters here were (very rudely) telling me that my forecasts of a D4E swap were completely wrong ... now the question is "at what price is the D4E swap going to take place?". Shareholders are always slow to realise what exactly a D4E swap means for a company. The simple fact is that, unless the bondholders graciously agree to swap some of their debt for equity, then Petrofac is insolvent. And if the bondholders aren't going to get repaid in full then why on earth should they agree to a cushy deal where shareholders get to retain a chunk of the company? Do you think that bondholders/bond funds are charities? "Would you agree that the price action in the last week is weird, who was scooping up the shares that were being dumped?"" No. And I think that I answered that in 39,438: There was an element of a short squeeze at the start of the week as the cost of borrow for PFC stock has soared to 85% and so some of the shorts decided to call it a day and close their positions. "Also how do you explain the contracts being awarded in the last few months, were all these companies mistaken about the financial health of pfc? " You (and many of Petrofac's retail shareholders) have completely misunderstood this point. It is common practice within PFC's industry that ANY important contact is guaranteed by a bank. The two big contracts that were announced on 20 Dec, for example: "Further to the Group’s market update on 4 December, today’s announcement coincides with confirmation that Petrofac has secured the performance guarantee required for the Ijmuiden Ver Alpha contract." had bank guarantees. The peculiarity with those contracts was that the only reason that the banks gave those guarantees was that Petrofac gave the banks cash collateral to mitigate their credit exposure to Petrofac. So the clients didn't make a mistake about the financial health of PFC, they explicitly made no assumption whatsoever about Petrofac's financial health, they got a bank to provide protection against ANY financial problems that Petrofac might have! The whole topic of financial guarantees is the one that forced Petrofac's hand and made them finally admit that they had a problem. The banks are no longer prepared to provide guarantees to support PFC's business unless PFC provides cash collateral for those guarantees. And whilst PFC did that with the two announced on 20th Dec it also admitted that that was not a reliable long term solution. "Last but not least metro share price didn't move much from around 35 p, the share dropped from 100p but that was before D4E was made public knowledge. Any thoughts on that Mr Jaknife?" The Metro Bank transaction was more complicated than a normal D4E swap and it's one that I decided to not get involved in. I would defer to WShak's greater expertise on Metro Bank. But the big difference was that the Central Bank got involved and threatened the subordinated bondholders with a bail-in unless they agreed to a debt for equity swap and it all seemed to get forced through on that basis over a weekend. JakNife |
Posted at 13/4/2024 15:39 by jaknife dealy,"right now, the full market-rated EV is 250m usd for the bonds, 150m usd for the equity, and maybe 200m for the bank debt (not discounted), so that makes something like 600m usd. The enterprise is definitely worth more that so the bonds are certainly undervalued imo" What fundamental analysis have you used to determine that "the enterprise is definitely worth more than 600m usd"? And is $600m the right target? The value of the business needs to be greater than c. $800m before there's any residual value for shareholders! There are a number of different models that you might use: Net Asset Value? The last accounts revealed a technically insolvent balance sheet with liabilities exceeding assets by $66m: That was at 30 June 2023 and we know that there have been losses since then, as revealed in the 20 Dec trading update: On the face of it I would expect the full-year balance sheet to tell you that the equity is worth minus $200m. That would imply a business value in the ballpark of $600m, which agrees with the enterprise value that you've calculated above! Hence a net asset value model says that the equity is worthless. PE Model? A traditional PE model takes a market multiple and applies it to the historic or forward EPS to calculate a value for the business. The problem for Petrofac though is that EPS has been negative for the last five years and the average EPS over the last seven years is also negative. Also, looking forward, the EPS is negative for 2024. So a PE model also says that the equity is worthless. Dividend Yield Model? There hasn't been one for ages and won't be one for a long time. Let's be generous and say "not applicable" rather than "the equity is worthless". EBITDA Multiple model? The historic numbers are negative so this model also implies equity is worth less than zero. The finger in the air model. We might as well have a bash at trying to calculate some sort of forecast. This assumes that PFC has a really good year, with a fair wind behind them: Revenue of $3,000m Gross margin of 5% SG&A of $225m (the average of the last six years) Tax of 25% I thought that these would be reasonable and produce a positive number but revenue of $3,000m on a 5% gross margin makes for a gross profit of $150m, which is less than my forecast for SG&A. Conclusion. I can't find ANY basis upon which Petrofac's equity is worth more than zero. Would you like to share your finger in the air analysis on how you arrived at your conclusion above. Apart from that, it is nice that finally we can all start talking about debt for equity swaps. For months now merely mentioning "D4E" drove some into apoplectic fits but now we are all on the same page and we simply have to agree "4p", which would be a £20m market cap and the traditional historic norm for a D4E swap on the main market. JakNife |
Posted at 13/4/2024 08:49 by armbar Agreed been saying it for a whileSomeone wants PFC and wants it cheap , Middle East for all the reasons I have stated for several months, PFC has huge value , wind eg TenneT solution ,TenneT alone is $8bn 6 systems the feed study suggests europe need 20 Masdar the renewable arm Adnoc are JV eg RWE 11bn Seagreen perfect fit See the sustainability plans for ME Hydrogen and carbon capture first of kind at Habshan Adnoc with PFCAmmonia and OCi This has been played a beauty imo , leak, fud , shorts done their job but if they get too greedy then will be punished.Proxy battle hostile or the BOD founder are facilitating the controlling share requirements , share price rising needed to slow it down or if it broke ranks share price would fly short squeeze be near the offer price , then looks unattractive , Middle East Andoc , ME Banks imoEnterprise value £1.20 ish Discount cash flow valuation higher But that is not what they will pay imo 80p max imo Always said interesting that PFC chose Teneo and Moelis the same as Adnoc, Adnoc ipo logistics and services division raising last year $770MPFC fit in seamlessly 1.4.24 ceo adnoc gas We aim to expand internationally by acquiring new positions in the gas value chain, targeting opportunities in Europe, India, China and South-East Asia if they add value to our business.Just think how PFC fits in Just my opinion takeover or controlling stake |
Posted at 12/4/2024 12:51 by pogue ArmbarI am struggling to read your posts, are you suggesting ADNOC will bid for PFC? If so you have zero knowledge of the oil and gas contracting business. I have some having spend 30 years in it and have worked for both ADNOC and PFC in the past. There is no way a national oil company will buy a contractor they do not have the workload for them to keep them occupied and I dont see other oil companies asking ADNOC to run their projects so its a waste of time and money. The only bidder for PFC would be another contractor but they wont want to take on the contract pipeline PFC have accumulated as they have bought the jobs by underbidding cost price to keep the work rolling in. Regards renewables all the major contractors are doing those projects nowadays. There is no value for anyone buying PFC unless its at a huge discount to compensate for the trouble sorting out its projects that are returning negative profits. Listen to those who understand how this is going to play out and save yourself some money. |
Posted at 12/4/2024 10:17 by jaknife tahmina1,"I have never dissed Jaknife, he has a considered opinion, but IMHO he misses the possibility that this company with its future prospects could be very attractive to a large energcy company seeking to get its expertise on the cheap and its humungouis order book. The gloom and doom assumes no bid. I'm not sure bond investors are smarter, they are gtting 33p on the £ how is that smart :)" I'm sure that the bondholders (and banks) would be delighted if someone were to come in and bid for the company. Any takeover would trigger the "change of control" clause in the legal docs and require the bidder to immediately repay the bonds and bank debt at par! Can you imagine ghhghh's delight at getting $100 instead of the current market price of c. $33?! Otherwise I remain mystified as to why you think that anyone would want to pay a lot of money for PFC's "humungouis order book"? It remains the case that, despite the massive order book, PFC is still forecast to make losses in 2024. Far too many people have forgotten the adage: Revenue is vanity, profit is sanity but cash is king! PFC's order book is vanity, the sanity is that it's lost $1bn+ over the last nine years and the cold hard truth is that Petrofac has run out of cash and desperately needs a fund raise! JakNife |
Posted at 12/4/2024 09:59 by jaknife dealy,"JK, normally I would agree with your assessment, but there is, imo, one element that makes this case slightly less fatal, namely a strong order backlog and pipeline. That creates room for alternative financing to take place." I struggle to remember the times when you've vocally agreed with me here but I am getting old, perhaps it's my poor memory? I would agree with your assessment that PFC's "strong order backlog and pipeline" mean that the D4E swap shouldn't be fatal. But beyond that I don't understand what "alternative financing" you're expecting? There's going to be a D4E swap! The relevant question is "at what price?" When it comes to Petrofac's "strong order backlog and pipeline" I will make the same points that I've been making for months now: * PFC has always had a large order book but the margins have been trivial and because of numerous problems actually they've lost money repeatedly. * Over the last nine years PFC has lost over $1bn! * Despite a large advance order book Petrofac is still forecast to make a loss in 2024! The "strong order backlog and pipeline" mean that there should be interest and support for a fund raise but it doesn't mean that new investors are going to put that money in at a generous level. The phrase that applies here is: New investors dictate terms to old investors I'm really sorry but current shareholders are going to be materially diluted. JakNife |
Posted at 09/4/2024 11:15 by armbar Ghhghh I have a risk reward profile that I am comfortable with , my purpose is the board for several months swamped by D4E 5p, covenants broken , bond restrictions , admin and bankruptcy was all a guarentee blah blah , which were clearly a narrative created by a short position and needed a alternate view.Whilst I take on that information as its a gift , allowing further research for a balanced view, some info is very relevant though which I take seriously So I appreciate PFC could end up in a D4E at what level who knows conversely they could secure what is required to have a bright future and a share recovery Now PFC could offer incentives on releasing of the collateral as I have mentioned by various means , also demonstrate DCF, growth potential , alternative structures , PE, etc Valuations on DCF interesting like an EV valuation for JV and TOWhat is very intersting is the connection to Uae and Adnoc , and the PFC value, a risk is an acquirer will use all kind of tactics to get as cheap as possible.Could they force a default , maybe maybe not , hostile , share swaps but it wont be pretty if a takeover happens, ayman et al will have their interests first which is some help I believe to shareholders.Contrac |
Posted at 09/4/2024 09:48 by armbar Couple of snippets why I think Adnoc Adnoc chief executive Sultan Ahmed Al Jaber has highlighted the UAE's ambitions to become a key LNG exporter on the back of several gas-focused upstream developments, including the multibillion-dollar Hail & Ghasha sour gas project.Estidama project has 8 packages PFC and consortium won 2 , 3 has been awardedAll 8 commissioning by Q3 2025PFC awarded the co2 injection and recovery Habshan Package 4,5,6,7,8 to goAll about in country value Uae Petrofac receives the Gold Seal for creating sustainable impact in the UAEResearch Estidama and its importance to the Uae , research job vacancies for PFC Uae , PFC is intrinsic to Uae and AdnocThis is outside of all the other projects eg TenneT, Algeria selected , BahrainAll research is in public domain just need to spend time researching |
Posted at 20/3/2024 12:41 by unnd Jaknife thank you for your response.However, I am aware of the current financial position of PFC and I took all your points into consideration when I posted the following:- "Yes all options are still on the table. However IMHO common sense will prevail after all sides have done their posturing. A deal will be reached to extend the term of the Bonds which will then make it palatable for the term of the RCF to be extended. The value of the RCF could then be increased or further loans sourced, based on the increasing backlog, whilst legacy and advanced payments are recovered and asset sales agreed over time. The MC was around £440m prior to the 'material strengthening of the balance sheet' being muted to the market. The MC is now around £130m due to the actions of shorters and others. The low MC has now made a D4E swap and/or Equity raise less attractive and probably unnecessary at this stage given that PFC are not currently in default of any loan agreement. The shorting companies probably thought that shorting would be a self fulfilling prophecy, however unfortunately for them it may work against them in this instance. If D4E swap or an equity raise is thought necessary by PFC in the future then it needs to be done at a more realistic MC and at a time that suits PFC and not shorting companies or others." |
Posted at 20/3/2024 12:25 by jaknife unnd20,"Yes all options are still on the table. However IMHO common sense will prevail after all sides have done their posturing. A deal will be reached to extend the term of the Bonds which will then make it palatable for the term of the RCF to be extended. The value of the RCF could then be increased or further loans sourced, based on the increasing backlog, whilst legacy and advanced payments are recovered and asset sales agreed over time. The MC was around £440m prior to the 'material strengthening of the balance sheet' being muted to the market. The MC is now around £130m due to the actions of shorters and others. The low MC has now made a D4E swap and/or Equity raise less attractive and probably unnecessary at this stage given that PFC are not currently in default of any loan agreement. The shorting companies probably thought that shorting would be a self fulfilling prophecy, however unfortunately for them it may work against them in this instance. If D4E swap or an equity raise is thought necessary by PFC in the future then it needs to be done at a more realistic MC and at a time that suits PFC and not shorting companies." There's so much wrong here that it's difficult to know where to start. 1. Fundamentally Petrofac is not credit worthy and that's why: (a) it can't get guarantees from its banks, (b) its banks are insisting that they get their loans repaid ASAP (c) the bonds trade at c. 40% of par meaning that bondholders are demanding a yield to maturity of c. 60% per annum in order to take on Petrofac credit risk! You don't need to take my world for it, Fitch have downgraded their assessment of PFC's credit worthiness to a sub-prime level: Have you looked at the balance sheet? The interims show a technically insolvent balance sheet with negative net assets of -$66m: See Page 16: And we know that H2 2023 was loss-making and that the forecasts for 2024 are for losses as well so the black hole at the centre of the balance sheet is only going to get bigger! 2. For a "deal" to be agreed with bondholders, the Company needs to give them something. The only thing that Petrofac has that it can give the bondholders is equity. But that still leaves the problem that Petrofac needs to raise cash as well! It is more than heroic to assume that banks will be prepared to lend money to Petrofac when they are demanding their money back ASAP and other lenders want a 60% return in order to take on PFC credit risk! Simply extending the term of the bonds won't change this. 3. There's no point blaming the shorters for the current share price. The people who have been selling have been predominantly longs and that's always the reality of these things. You can work this out simply by looking at the volume of shares that have traded over the last three months: 429m shares have traded, equal to 82% of PFC's total share capital. And yet the short position is only 10.9% of PFC's equity! The share price is where it is because Petrofac is fundamentally an awful business: (a) It's lost more than $1bn over the last nine years (b) it was forced to go to the markets in October 2021 to raise $275m in a placing but since that date has lost almost twice that amount (c) even with the new contracts it's forecast to make losses in 2024! (d) the balance sheet is a hopeless mess (e) it needs a material capital restructuring to rescue it I honestly don't understand what it is that shareholders see in Petrofac. It's almost as if shareholders think that having a large backlog is the most important factor in valuing a company rather than profits and cash generation! 4. At some point in the future you will come to appreciate that the shorts are the good guys and that the bad guys are actually Petrofac's directors who have hopelessly mismanaged the business for a long long time. What's more the only people posting the truth about the Company (here) are the shorts, like me. Sadly you won't believe this now and won't accept this point until a couple of weeks *AFTER* Petrofac announce the details of the capital restructuring that is so obviously on its way. JakNife |
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