Petrofac Share Discussion Threads

[halfpenny] 20/6/2024 11:47

Oh Dear many lose out as Humpty DUMPty Falls.

Petrofac has failed to generate a concrete plan to restructure the business and shore up the balance sheet,” Hargreaves Lansdown said in a note to investors. “As a result there are now pressing concerns about the company’s ability to survive. Even if the situation is resolved, paying its lenders in shares rather than cash is a distinct possibility. That would mean investors’ ownership of the company would be significantly diluted.”


Too RISKY....How Low How Soon...

[chris cat] 20/6/2024 10:11

JN....I'm hoping for a positive outcome from my small holding but more in hope than anything else, your cartoon is very funny and apt though.

[jaknife] 20/6/2024 10:04

Petrofac shareholders be like:

[epicwarlock] 20/6/2024 09:29

Jeez, that's a brave allocation I own this one at 62p unfortunately, having thought a year ago it might be a takeover targetOh well, I've done worse....TBLD and ECOB for example....and just eeking out a positive return on the portfolio overall.GLA, it's weird times out there. Think my gilts & bonds will continue to do well for some time. Risk assets could still go a bit higher overall as well to make new highs before a much needed correction, perhaps later this year or next

[wellbutpoor] 20/6/2024 08:22

Someone wants the stock.

Dilution is well and truly priced in.

Fill your boots.

This is the sale of the century.....I'm holding 525,000 at 18p

Bonds are steady

[socionomics] 20/6/2024 08:02

The pack should arrive soon. I want to see the 20's by the end of the week.

[showme01] 20/6/2024 07:44

Lots of 500k buys the last couple of days. Somebody knows something .

[armbar] 20/6/2024 07:43

Just have a look at how Tullow TLW share price reacted on restructuring news Someone keeps buying 500ks for days , shorts remain Now ask yourself , who? , why? founder Asfari and Azvalor not sold any Middle East hands imo in country value Uae and intrinsic value to Adnoc , just an opinion GL

[armbar] 20/6/2024 07:28

Mr or Mrs 500k is back , the 500ks continue

[geckotheglorious] 19/6/2024 21:51

Cue Witless 123

Fitch dont know what theyre talking about

Strong buy.


Hey witless123, how ya doing hun?

[mirabeau] 19/6/2024 21:32

Fitch Downgrades Petrofac to 'RD' on Uncured Missed Coupon Payment

Wed 19 Jun, 2024 - 09:07 ET

Fitch Ratings - London - 19 Jun 2024: Fitch Ratings has downgraded Petrofac Limited's Long-Term (LT) Issuer Default Rating (IDR) to 'Restricted Default' (RD) from 'C' and affirmed its senior secured debt rating at 'C'. The Recovery Rating on the senior secured debt is 'RR4'. A full list of rating actions is below.

The rating actions follow the uncured expiry of a 30-day grace period, on the coupon due on 15 May 2024 for its USD600 million notes due 2026. The 'RD' rating indicates an issuer that in Fitch's opinion has experienced an uncured payment default but has not entered into bankruptcy filings or ceased operating.
Key Rating Drivers

Uncured Missed Interest Payment: Petrofac has not paid the coupon due on 15 May 2024 on its USD600 million 9.75% senior secured notes in an effort to enhance liquidity as it engages with financial stakeholders to restructure its balance sheet. The 30-day grace period according to the original debt documentation has also expired. Fitch treats the uncured expiry of any applicable original grace period as a 'RD'.

On 29 April, Petrofac announced that it entered into forbearance agreement with an ad-hoc group of bondholders representing about 41% of the outstanding notes. It stipulates that those noteholders will not take any action in respect of the non-payment of the coupon until at least 30 June 2024. The group remains in discussion with other bondholders and creditors.

Imminent Debt Exchange: Petrofac has 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 would be implemented to avoid insolvency and would result in a material reduction in terms for creditors, which it would view as a distressed debt exchange (DDE) under Fitch's Corporate Rating Criteria.

Inevitable Balance-Sheet Restructuring: We see a balance-sheet restructuring as inevitable before the group can secure performance guarantees from banks, which are vital for its business. 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 drives its deteriorating revenue visibility. Petrofac's short-term maturities include about USD71 million term loans and a USD127 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 backstop 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.
Derivation Summary

Petrofac's 'RD' Long-Term IDR reflects the uncured expiry of a 30-day grace period on the coupon due on 15 May 2024 for its USD600 million notes due 2026.

Key Assumptions

Key Assumptions Within Our Rating Case for the Issuer:

-Revenue of around USD2.7 billion in 2024 and USD3.0 billion in 2025

-Slightly negative EBITDA in 2024, and turning positive in 2025 due mainly to higher activity levels

-Working-capital inflows in 2024 and 2025

-Non-core assets disposal proceeds of about USD60 million in 2024

-No acquisition and other disposals in 2024-2025
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 its integrated energy services division

-For the purpose of recovery analysis, we assume that the debt comprises USD600 million senior secured notes, its USD127 million RCF (full drawdown assumed) and USD71 million term loans. We assume that all debt instruments rank equally among themselves

-The GC EBITDA estimate of USD100 million reflects Fitch's view of a sustainable, post-reorganisation EBITDA level on which we base the enterprise valuation (EV). Distressed 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 'C' 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:

-Fitch will reassess the IDRs on the completion of a debt restructuring process; the updated IDRs would reflect the new capital structure and credit profile of Petrofac

Factors That Could, Individually or Collectively, Lead to Downgrade:

-The IDR could be downgraded to 'D' in the absence of an agreement with lenders and bondholders, materially eroding liquidity leading to bankruptcy filings or other formal insolvency procedures
Liquidity and Debt Structure

Unfunded Liquidity: Petrofac's liquidity is insufficient to cover its interest payments or repay debt under its maturity schedule.
Issuer Profile

Petrofac is an international engineering and construction services 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.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS

Click here to access Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included.

[halfpenny] 19/6/2024 17:12

Wot a mess glad i am watching as the price gets lower and lower...

How Low How Soon...

[papillon] 19/6/2024 17:04

"Petrofac shares now the most shorted stock in London"

[investtofly] 19/6/2024 13:39

Let's hope you are right

[socionomics] 19/6/2024 13:25

I have a very special set of skills.

[pacsltd] 19/6/2024 12:52

Wow @socionomics you were right !! How do you do it?

[socionomics] 19/6/2024 11:10

24p Target - 7 - 10 sessions.

[armbar] 19/6/2024 08:51

Current time 9.51Wait until this afternoons price actionAll in my opinion GL

[dipa11] 19/6/2024 07:27

Top up today as price is low and this is my lowest price. Good morning.

[armbar] 18/6/2024 14:39

Number 2 shortly after GL not sure what is happening but someone either closing or buying in chunks since Thursday

[armbar] 18/6/2024 14:26

First one :) appeared

[armbar] 18/6/2024 10:43

Awaiting the next batches of 500000Lets seeGL

[geckotheglorious] 18/6/2024 10:11

Hostile takeover expected...
hahaha deluded.

Once the balance sheet has been repaired(post massive D4E) then sure, quite possibly will be a takeover. But shareholders prior to D4E will get wiped out.

[firestorm911] 17/6/2024 22:14

Poor when I am done with you, you will be poor and in a mental hospital.

Regards,
F911
RMC