Petrofac Share Discussion Threads

[halfpenny] 12/4/2024 09:56

Nobody knows how low or even if they can survive.!!

Sad day for those who believed their story of Mega Deals and Asset Sales!!
The RNS that never came was a sign something was wrong!!

Where now and how low only time will tell.

Darker Days Ahead...

[loglorry1] 12/4/2024 09:55

@GHH very normal for brokers to put out flattering notes prior to a restructuring. Big fees to be earned by getting their noses in on them.

[loglorry1] 12/4/2024 09:52

@tahmina1 - it's like whack'a'mole with these "equity has value" arguments. As has been explained many times any purchaser would need to repay the bonds in full and pay off the banks (change of control clause). They also need to buy the equity at a premium and then inject another $200m or so of fresh capital.

It's far from cheap at $1.2bn-1.4bn EV to put it back on it's feet!

They could do a deal with the lenders and buy it for some haircut on the debt plus say £1 for all the equity (not per share I mean £1) but that will see current equity wiped out.

People who don't understand capital structures should not invest in shares with any debt and arguably stick to premium bonds.

[tahmina1] 12/4/2024 09:52

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 :)

[ghhghh] 12/4/2024 09:44

I shouldn't have posted the SG 22p because it was clearly an unfounded assumption based on adjusting their previous forecast to allow for $500m of new equity at 22p. However they did raise their PT by 1p. Brokers are normally reluctant to spark a price crash eg by highlighting the risk of a D4E at say 4p so 22p (10% below the share price at that date) might be neutral for a viable business, as in not distressed.

This Note was dated 22nd March and titled

Marginally more positive - Expect sharp price swings in coming weeks

The reality is that 22p might be realistic if new equity was queuing at the door. However its very clear from today's update that they are struggling. There was nothing positive? They need this restructuring sorted asap to free up the guarantees..

And the bonds have dived to 33 cents.

[geckotheglorious] 12/4/2024 09:39

Witless,

Oh dear oh dear.

D4E confirmed as a very likely outcome. Just a question of what percentage of equity gets issued.

Most likely 50% at least.

Only question is at what level - and I doubt it is at Socgen's alleged 22p!!!

All confirmed by an official company RNS.

Jaknife has tried to warn you from the off but all you could muster was ad hominem attacks. Perhaps an apology is forthcoming from you? Doubt you've the courage, or the character to proffer one though.

Bond investors are nearly always smarter than Equity ones. And this is just another instance of such.

Down 28%. Still trading well above likely D4E level.

Coincidence that it's close to that mooted Socgen 22p???

[tahmina1] 12/4/2024 09:35

Jaknife and others..... DFE at 4p assumes no one wants to take control of this company at a bargain price. With all the money sloshing around in the Gulf, and its pivotal importance to the oil business, I would not assume that. Someone can come in with a low ball offer for the equity. This could turn around. The debt is high but $8 billion backlog if margins are decent could be a great reward to an investor...

[dealy] 12/4/2024 09:32

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.

[lodgeview] 12/4/2024 09:32

It's OVER for PFC

[jaknife] 12/4/2024 09:28

Dodge Meister,

"The question really seems to be how much of a haircut the bond holders are willing to take given they currently only get 35p in the pound."

Why should the bondholders take ANY haircut? A bond is a "promise to pay" and if Petrofac wishes to break that promise then the penalty should be severe.

In a capital restructuring the question that needs to be asked is: "What is the pre-money valuation?", ie what value should everyone place on the business before the new money goes in? I hope that everyone now accepts that Petrofac is not in a position to repay its banks/bondholders? Once you accept that as a fact then the inevitable realisation must therefore be that PFC is teetering on the edge of insolvency and hence the pre-money valuation is going to be very low!

I've already explained this week (see post 39,411: ) that the traditional pre-money valuation for large cap D4E swaps in the UK market has historically been around about a £20m market cap. I would expect that to be the guide that is followed here. A £20m market cap is about a 4p share price.

I accept that 4p is a large discount to the current share price but it is often the case, with recapitalisations like this, that shareholders take a long time to realise and accept what is going to happen (it is very akin to "the five stages of grief). After all, a few days ago I was being chastised for daring to suggest that a D4E swap was due and now everyone accepts that that is the case and are asking "what price?"!

Leoneobull,

You have misunderstood, I am already back from holiday, hence why there were no posts for a week. But I apologise in advance that I have a lunch planned for today, which is unlikely to end until very late and hence normal service will again be interrupted!

JakNife

[topazfrenzy] 12/4/2024 09:14

Consider yourselves lucky you had that fake pump so you can at least still sell in the 20s

10p by June if not before

Target price: 0

STRONG SELL!

[loglorry1] 12/4/2024 09:13

"Bonds due in 2026 remember ...."

Not if they default in May by not paying the coupon and they've already told you today that there is a D4E about to happen. We are way past the maturity date having much of an effect.

[dodge meister] 12/4/2024 09:09

The question really seems to be how much of a haircut the bond holders are willing to take given they currently only get 35p in the pound.

[tahmina1] 12/4/2024 09:01

Bonds due in 2026 remember ....

[mj19] 12/4/2024 08:59

Where will this go Monday with this uncertainty

[whites123] 12/4/2024 08:59

Bonds not due until latter part of 2026..

2.5 years away.

[loglorry1] 12/4/2024 08:56

"How much debt do they have?"

$252m RCF and Term loan plus $600m bonds. Not much cash and c$30m coupon payment due May.

[kirk 6] 12/4/2024 08:55

Here comes the rally back to 28p

[dealy] 12/4/2024 08:55

There have been 3 big spikes in this stock over the last 12 months and thankfully as a trader I was able to get out on each spike (1 year ago on the big contract win with Hitachi, Christmas on the spike to 40p and even this week's spike to 33p). This how remains a lesson in how NOT to manage a balance sheet.

[topazfrenzy] 12/4/2024 08:51

This isn't even worth 5p never mind 22p, long way to fall still so keep feeding the idiots while you still can

[topazfrenzy] 12/4/2024 08:50

At least you still have idiots like Whites who are willing to buy your shares as you dump this POS lol

[topazfrenzy] 12/4/2024 08:48

FOR LEMMINGS AND MUSHROOMS ONLY

[neo26] 12/4/2024 08:47

How much debt do they have?

[brut winky] 12/4/2024 08:46

Added 25%, good as saying something is close and if they didn't want today they wouldn't of said anything.