Petrofac Share Discussion Threads

[action] 22/4/2024 12:16

Turnover still below 2 million. Very strange

[investtofly] 21/4/2024 19:43

No rumours in the Sunday Press?

[fiscal cliff] 19/4/2024 15:24

dealy - I'd chalk that last exchange up as a win If I were you my friend. You managed to live rent free inside his head for at leat 45 minutes while he copied and pasted that reply.
Early retirement? LMAO. Still working from an office with technical support and professional feed.

Cliff.

[dealy] 19/4/2024 15:13

JK - I respect your attention to detail.

[jaknife] 19/4/2024 15:01

dealy,

I’m not convinced that you understand the topic of “going concern” and what constitutes a “warning”; versus what is a failure. Regardless I see that you’re not disagreeing that Petrofac has warned on profits and so I will take that as a small win!

JakNife

[dealy] 19/4/2024 13:59

There is a difference between saying "we fail the going concern test" and "after careful consideration the directors feel comfortable ... with it being a going concern etc".You are implying these are the same thing.

[jaknife] 19/4/2024 13:48

dealy,

"The statement in the 1H23 results does however say that they are comfortable with the classification of going concern, whilst pointing out the risks."

Your original claim was "- no going concern warning". Are you disputing that the inclusion of the words in the last interim results:

"there is a material uncertainty that casts significant doubt upon the Group’s ability to continue as a going concern"

was NOT a warning?

Could you please limit your response to either "yes it was a warning" or "no it wasn't a warning because what they actually meant was ...... "?


"Regarding "profit warning": the company has not come out in the last 9 months and said "those numbers we gave you are not achievable"."

On 20th December last year Petrofac put out a trading update that announced a new contract with TenneT and that two guarantees had also been procured:



within that you will also find the words:

"Expect a full year EBIT loss in E&C of approximately US$215 million, including US$110 million one-off write downs in contract settlements to protect cash flows."

as well as :

"The Group has continued to advance contractual settlements, collecting approximately US$180 million in the year to date. As referenced in the business update on 4 December 2023, due to the delays in securing guarantees, the Group no longer expects to collect advance payments on new contracts before the year-end."

and:

"Measures taken by management resulted in positive free cash flow in the second half, even in the absence of advance payment receipts, albeit this was offset by an increase of over US$100 million in collateral for guarantees. As a result, net debt at year-end is expected to be modestly higher than at the interim results (30 June 2023: US$584 million)."

This was the company telling you:

A. We will not achieve our original profit forecasts,
B. We will have material lower cash than we expected, and
C. Year-end net debt will be worse than expected.

Most newspapers focused on the new Tennet contract but Energy Voice, for example, noted:

Petrofac to take $110m write-down over contract issues

Petrofac (LON: PFC) will take a $110m write-down for 2023 on contract agreement issues, it has warned, as the group continues to address cash flow concerns.

The financial hit for its powerful Engineering and Construction (E&C) division will come as part of a wider $180m group loss, the energy services giant said in a trading update.

That will also include a $12m “bad debt” provision for its Asset Solutions segment.

See:

Does it not worry you that you don't appear to be in touch with the facts surrounding Petrofac?

JakNife

[dealy] 19/4/2024 13:21

The statement in the 1H23 results does however say that they are comfortable with the classification of going concern, whilst pointing out the risks. Regarding "profit warning": the company has not come out in the last 9 months and said "those numbers we gave you are not achievable".

[scantrader] 19/4/2024 12:53

Lol. Spot on, log

[jaknife] 19/4/2024 12:26

dealy,

"Just a quick reminder about what has NOT been communicated:

- no going concern warning"

- no "pending illiquidity " as per the definition and its importance in determining if a company is a Going Conern

You've obviously not actually read the going concern statement. I invite you to compare and contrast the most recent going concern statement from the 30 June 2023 interims



with the same from the 2022 interims



In particular you will find in the "Conclusion" section that the following words were added for the 2023 going concern statement:

"Consequently, in accordance with accounting standards, the Directors have concluded that there is a material uncertainty that casts significant doubt upon the Group’s ability to continue as a going concern during the Assessment Period for the Group’s financial statements for the six months ended 30 June 2023 relating to the timing of receipt of these collections from clients. [my bold]


"- no profit warning"

The newspapers disagree with you, this from a year ago:

12 Apr 2023: Petrofac stock plunges on profit warning two weeks into new chief executive's tenure


and from just four months ago:

4 Dec 2023: Petrofac shares as it lays out plan to reverse cash-flow fears



"- no breach of covenant"

Petrofac's covenants were specifically adjusted with the extension of the bank facilities in April last year:



PFC would not have been able to comply with the old covenants, the new ones were introduced on the understanding that PFC would be paying back a large amount of cash by this month. We await news on whether that cash repayment has been made given that we now know that Petrofac "has engaged and remains in discussions with its lenders to restructure its debt which would result in a significant proportion of the debt being exchanged for equity in the business."

JakNife

[armbar] 19/4/2024 12:22

Same as yesterday Looking ready now for the blue day

[dealy] 19/4/2024 11:20

Just a quick reminder about what has NOT been communicated:- no going concern warning- no "pending illiquidity " as per the definition and its importance in determining if a company is a Going Conern- no profit warning- no breach of covenantAssuming any of the above is pure speculation

[bouleversee] 19/4/2024 11:09

As a long-term shareholder (losing a packet on paper at today's price), I obviously hope you are right, Whites, but I'd feel a lot more reassured if today's company announcement said they were going to deliver for existing shareholders as well as the country.

[rossifumi] 19/4/2024 11:04

I feel the same,I created a petition to ban short selling but not had much interest, would love to put the shorts under pressure https://petition.parliament.uk/petitions/657294

[wellbutpoor] 19/4/2024 10:43

Unusually large spread in the share price this morning...

[ghhghh] 19/4/2024 10:40

JN

I wonder if things are so bad that PFC will attempt a Restructuring Plan that crams down current shareholders entirely?

The two big imponderables are

1. Asset sales - timing and realisable value. Some brokers have mooted the possibility of selling Core assets, eg UK if desperate.

2. Assuming package is targeting $500m, to what extent does freeing up the PG's reduce this? I'd guess not much since cash flow versus cash? And the BoD will be keen to ensure the restructuring leaves PFC on a solid footing since they have salaries to protect.

Results and RCF/TL part payments by end of April so not long to wait...

[fiscal cliff] 19/4/2024 10:03

"Cram down" assumes Court involvement. Nowhere near that.

[jaknife] 19/4/2024 09:43

ghhghh,

"Kepler think that they will but imo a bit messy because Bonds and RCF/TL are only pari passu in a wind up. RCF/TL's have first dibs on any cash raised and time advantage."

There are meant to have been some amortisation payments on the RCF/TLs such the combined amount outstanding is no longer at $252m. Petrofac have never published the precise detail of the amortisation profile but it has been referenced in some broker notes.

But otherwise I'm with Was, the banks are going to have to take a haircut as well.

I wonder if things are so bad that PFC will attempt a Restructuring Plan that crams down current shareholders entirely?

JakNife