Petrofac Share Discussion Threads

[topazfrenzy] 17/4/2024 08:13

Sad to watch the lemmings still thinking that this is not going to be diluted to high heaven ...

[topazfrenzy] 17/4/2024 08:13

The descent to 10p has begun

[armbar] 17/4/2024 08:09

Last of the drop days imoGL

[geckotheglorious] 16/4/2024 21:47

dealy
Post 39805
In a bankruptcy, yes. But in a company that is operating (delivering, collecting cash, winning new orders), it's much more complicated. Bondholders have to play ball. It's not Nat West doing a foreclosure on a terrace house

Why do Bond holders have to play ball?

PFC has decent FCF that will cover its upcoming liabilities???

[investtofly] 16/4/2024 21:46

Results are due by the end of the month, and then all will be reviled one way or another

[lodgeview] 16/4/2024 19:54

Where's dipa gone LOL!!!?

[armbar] 16/4/2024 19:52

Then consider the recent RNS and its purpose to halt the share price Then consider MEED reported the Gas Bahrain project awarded to Petrofac 5.4.24 , The upstream Algeria $1Bn selected 2.4.24Then think why would you not RNS , clearly the impact to the share price and goes against the halting of the SP, so use this week to delay for the JV TO MBO to complete the accumulation. Monday all to be revealed imo Shorts have limited time imo

[kirk 6] 16/4/2024 19:40

Obviously something bad is just about to be announced

[halfpenny] 16/4/2024 18:20

Remember you were told 20p

Now the main fall to 14p or less.

Darker days on the way...

[armbar] 16/4/2024 18:15

So petrofac have in country value to the Uae , intrinsic to Andoc , have first of its kind hydrogen solution CCUS for Adnoc, scalable wind solution built in Uae in global demand, expertise , 9000 employees , tech and knowkdge, TenneT is $8bn to PFC.World hydrogen summit is on in Dubai pledges of tens of billions to finance green energy plus COP28 $8bn backlog $60bn pipeline someone will want that cash flow, connection is strong with the ME Asfari the founder 85M shares sold none, and between bod and Azvalor have over 30%,, why no selling ?so they could mbo acquire remaining share 360M , 60p for 220M plus RCF 252M , minus asset sale 60M-100M Yours for plus minus 400M , renegotiate and extend the bonds , and you ipo newco for multiples of the ME ADX 18months then no debt , RTO into Venterra. OrAdnoc buy 522M shares 60p 313M plus RCF 252 minus asset sale 500M re-negotiate bonds but needs votes so would be more hostile than friendly at these levels OrJV Private equity Cash injection Apollo, adnoc covers the 252M RCF for X renegotiate bonds which not due Nov26Unlocks and improves balance sheet OrSomeone wants them to default and take them post restructure chapter 11 , in this in the interest of the lenders ? BH and AA probably not but maybe if ME banks OrD4E wipe everyone out including the founder think he may prefer the other options but what influence does he have. But lets see

[armbar] 16/4/2024 18:07

Will watch the price action I have been averaging so ok with the current position Feeling is another day tomorrow drop based on today maybe 18-19 tomorrow on no news but then I feel time for shorts to pro actively close, they dont want to be last one out losing out on gains So dynamic is my answer but still believe a JV,TO,MBO or refinance before D4E but that is just an opinion which goes against most others I appreciate.GL

[dealy] 16/4/2024 18:00

In a bankruptcy, yes. But in a company that is operating (delivering, collecting cash, winning new orders), it's much more complicated. Bondholders have to play ball. It's not Nat West doing a foreclosure on a terrace house

[dudishes] 16/4/2024 17:22

Armbr, fine.

At 20p now, so where are you going from here? Hanging on to you long or reversing?

[armbar] 16/4/2024 17:14

Stick but with some risk management My post 2 days ago share price was 26Post 39724 Someone wants in or wants it allAdnoc or Apollo imo JV or a takeover 60-80pNow if the below is true then that is one averaging down mr Asfari who paid 115p for $38M, if the offer comes looks ok in his eyes My view it will hit 20-22 this week next Monday all to be revealed and the new contracts but that is just a guess. It 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

[dudishes] 16/4/2024 17:04

Gets yer shorts in early then!

[noramping] 16/4/2024 17:02

Facts are the current shareholders are bottom of pile.
Some people are deluded, the company has told you what it's proposing

[dealy] 16/4/2024 16:59

As far as the outlook for the company is concerned, it contained no new forecast of revenue, Ebitda, etc. In fact, the given forecast looks reasonable.It simply mentioned that, from the perspective of the bondholders, anything other than following the prescribed course effectively equates to a default. The company could survive such a default if an agreement is made. Bankruptcy will not help the bondholders. It is in their interest to negotiate a settlement (irrespective of their "senior" capital status because it won't help them)

[dudishes] 16/4/2024 16:56

Armbar/whites, stick or twist?

[loglorry1] 16/4/2024 16:47

"The Fitch downgrade doesn't add anything new to what most of us already know?"

I think some of the posters here will call Fitch liars who are working for evil hedge funds who want their shares cheap. However I agree it's not new news.

[ghhghh] 16/4/2024 16:30

Bonds are trading slightly up this pm. I'm told someone has bought 15m today but not sure how reliable this is. Offered at 30 cents on Friday, I bt a few more yesterday at 31.45 cents plus accrued. Best offer now is 32.5 cents.

The Fitch downgrade doesn't add anything new to what most of us already know?

[loglorry1] 16/4/2024 16:18

Fitch Downgrades Petrofac to 'CC'; Removes RWNFitch Downgrades Petrofac to 'CC'; Removes RWN

Fitch Ratings-London-16 April 2024:

Fitch Ratings has downgraded Petrofac Limited's (Petrofac) Long-Term Issuer Default Rating (IDR) to 'CC' from 'B-' and senior secured debt rating to 'CC' from 'B-'. The Recovery Rating is 'RR4'. Fitch has simultaneously removed the ratings from Rating Watch Negative (RWN). A full list of rating actions is below.
The downgrade reflects increased risk of imminent restructuring that would be perceived as a distressed debt exchange (DDE) under Fitch's Corporate Criteria. This follows Petrofac's public announcement that ongoing discussions with its lenders would result in a debt exchange.
Fitch expects to downgrade the Long-Term IDR to 'C' on announcement of a proposed debt exchange, and further to 'RD' (Restricted Default) on its completion, in accordance with our rating definitions.

Key Rating Drivers

Increased Risk of Imminent DDE: We believe that an imminent default of some kind is probable despite ongoing discussions with lenders, prospective investors and certain major shareholders. On 12 April 2024 Petrofac announced that ongoing discussions with its lenders to restructure its debt would result in a significant proportion of the debt being exchanged for equity in the business. Fitch expects this proposed debt restructuring to result in a material reduction in terms for creditors, which it would view as a DDE under Fitch's Corporate Criteria.
Inevitable Balance-Sheet Restructuring: We see a balance-sheet restructuring as inevitable before the group can secure performance guarantees from banks. The group's limited liquidity and increasing reliance on liquidity sources that are subject to execution risk, such as non-core asset disposals, add to the difficulty of securing bank guarantees, which is solely behind its deteriorating revenue visibility. Petrofac's short-term maturities include USD90 million term loans and a USD162 million fully drawn revolving credit facility (RCF), both maturing by October 2024.
A performance guarantee is a standard contractual requirement in engineering, procurement, and construction (EPC) contracts. It is typically provided by banks as a financial back-stop to clients that project delivery will be in line with the agreed terms, and if not to provide financial remedy. A protracted inability to secure guarantees could lead to a broader commercial fallout for Petrofac, including potential cancellations of contracts and challenges in obtaining new contracts.
Uncertain Measures to Support Liquidity: The execution risk of Petrofac raising additional capital is exacerbated by the fairly limited value of its non-core assets, low market capitalisation and the resulting need to explore a broad range of financial options. A potential solution could include equity injections from financial investors via the acquisition of a non-controlling stake in components of the business portfolio. The group continues to explore various other financial options.
Sound Business Profile: Petrofac has a solid overall E&C market position, with a broad range of skills and services covering onshore and offshore works, and delivering projects in upstream and downstream oil and gas developments. It has also demonstrated expertise in sustainable energy E&C activities, which firmly positions the group for growth in this smaller but increasingly important sub-sector. Petrofac estimates its order backlog to have increased to about USD8 billion at end-2023, supported by its strong order intake across both E&C and asset solutions segments totalling about USD6.8 billion.


Derivation Summary

Petrofac's 'CC' Long-Term IDR reflects increased risk of an imminent debt exchange, which would be viewed as a DDE under Fitch's Corporate Criteria.
Petrofac has no close direct Fitch-rated peers. We view Petrofac's business profile as weaker than Saipem S.p.A.'s, due mainly to the latter's significantly stronger revenue visibility supported by its large backlog. We view Petrofac's business profile as weaker than John Wood Group plc's due to declining revenue visibility related to the group's inability to secure performance guarantees. Both companies have a solid position in their core markets and sound geographic diversification.


Key Assumptions

-Revenue of around USD3.0 billion in 2024, and gradually increasing to USD4.1 billion in 2026, versus USD2.7 billion in 2023
-Negative EBITDA of around USD70 million in 2023; EBITDA margin at about 1% in 2024 and 3%-5% in 2025-2026
-Working-capital outflow of about 1% in 2023, and working-capital inflows in 2024 and 2025
-Non-core assets disposal proceeds of about USD60 million in 2024
-No dividends and acquisitions in the next four years

Recovery Analysis

-The recovery analysis assumes that Petrofac would be reorganised as a going-concern (GC) in bankruptcy rather than liquidated. It mainly reflects Petrofac's strong market position, engineering capabilities, customer relationships and asset-light business model, following disposals in the integrated energy services division
-For the purpose of recovery analysis, we assume that the debt comprises USD600 million senior secured notes, its USD162 million RCF (full drawdown assumed) and USD90 million term loans. We assume that all debt instruments rank equally among themselves
-The GC EBITDA estimate of USD107 million reflects Fitch's view of a sustainable, post-reorganisation EBITDA level on which we base the enterprise valuation (EV). Stress on EBITDA would most likely result from severe operational challenges in lump-sum projects
-Fitch applies a distressed EBITDA multiple of 4x to calculate a GC EV. The choice of multiple mainly reflects Petrofac's strong market position being offset by weak revenue visibility and demand volatility in the oil and gas end-markets
-After deducting 10% for administrative claims, our waterfall analysis generates a ranked recovery for the senior secured debt in the Recovery Rating 'RR4' band, indicating a 'CC' instrument rating for the group's USD600 million senior secured notes. The waterfall analysis output percentage on current metrics and assumptions is 45%.


RATING SENSITIVITIES

Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade:
-An upgrade is unlikely given the announced prospect of a debt exchange. It would require a debtor-friendly transaction leading to significant improvement in liquidity and a sustained ability to obtain performance guarantees (and/or advance payment guarantees) for both existing and future projects
Factors That Could, Individually or Collectively, Lead to Downgrade:
-Announcement of the debt exchange or other form of debt restructuring, which Fitch would view as a DDE
-Non-payment of any of financial obligations under the current capital structure
-Full liquidity erosion with imminent irrevocable impairment of payment capacity

Liquidity and Debt Structure

Limited Liquidity: As at 30 June 2023, Petrofac's liquidity profile comprised USD152 million readily available cash (excluding around USD101 million deemed not readily available by Fitch, mainly for intra-year working-capital swings). The group has access to an USD162 million RCF (fully drawn at 30 June 2023). The main upcoming maturities include about USD90 million term loans and an USD162 million RCF drawdown both due in 4Q24. We estimate positive free cash flows in 2H23 and 2024.
Long-Dated Debt Structure: As at 30 June 2023, Petrofac's debt maturity profile mainly comprised USD600 million senior secured notes due in 2026. Immediate maturities are around USD90 million term loans and USD162 million RCF, both due in 4Q24.

Issuer Profile

Petrofac is an international E&C service provider to the energy industry. The group designs, builds, operates and maintains oil and gas facilities, delivered through a range of commercial models (lump-sum, reimbursable and flexible).

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit hxxps://www.fitchratings.com/topics/esg/products#esg-relevance-scores.

[owan] 16/4/2024 16:18

AA cannot be happy with this price action. All will be revealed soon. Holding on here but someone wants ur shares cheap! Ain’t selling mine even though am down 80%.

[dealy] 16/4/2024 16:12

Also, how is the company in such dire straits now having WON this huge North Sea contract (as opposed to having NOT won it or something equivalent) ???

[armbar] 16/4/2024 16:00

Agreed ,release the partial collateral being asked for by PetrofacThe RNS was also making that clear D4E and we in discussions with other potential investors and major shareholders re investment Asked the lenders as I said before, play nicely Or a JV, TO,MBO at these levels gets even more likely

[dealy] 16/4/2024 15:59

The debt does not live on its own. it's tied to the success of the company, which includes other stakeholders and the equity holders