Petrofac Share Discussion Threads

[fuji99] 18/11/2017 14:17

Bouleversee - Agree with you as accepting a low bid is an indirect action of guilt but at some point management can be put under pressure to accept any deal to avoid the case trailing for years with a risk of losing major customers and scaring prospective new ones. At the end of the day without orders PFC will struggle to survive. So in this particular situation the management does not have plenty of choice and I am sure they won't put the future of the company at risk. So if it is quickly proven there is no case, then management will be in a very comfortable position to do what suits them, but if the case keeps trailing like in the case of RR., then they would accept any proposal that will avoid them any future nightmares and save the company from uncertainty and the risk of seeing their orders and customers vanishing which automatically results in a sharp adjustment of the share price anyway. So they are walking on a tight rope.

[vk74] 18/11/2017 13:56

Either way it's good news for all the shareholders. I am happy with my 50k shares.

[bouleversee] 18/11/2017 13:23

Thanks for that info 1gw. Very interesting. We will just have to wait and see what happens.

[woodhawk] 18/11/2017 13:23

Thanks for your well-reasoned comments, bouleversee and 1gw. Excellent stuff - pity there's not more like these posts on here, instead of the more common "where's the RNS" style drivel.

[1gw] 18/11/2017 13:09

Perhaps also a bidder would focus on creating a big enough role in the merged company for Asfari to win his support.

[1gw] 18/11/2017 12:14

Takeover scenarios.

As a Jersey-registered company quoted on the LSE, I think Petrofac is subject to the UK takeover code isn't it?

If so, a "normal" takeover would have a 90% pass mark, whereas a "scheme of arrangement" would get through with 75% (plus a majority of shareholders). I think a "scheme of arrangement" needs the co-operation of the target company though doesn't it? In addition, I see from a quick google that in Jersey there is something called a "statutory merger" which requires only 2/3 of the votes (i.e. a lower passmark) but it does also need board approvals.

So the problem for a "hostile" takeover is the 18% held by Asfari, plus maybe the 5% held by the family of Maroun Semaan. MS was one of the founders of Petrofac and died fairly recently, but you might expect the family still to be loyal to the company.

I would have thought therefore, more likely than an outright hostile takeover, is a public offer and an attempt to get the board onside. The question would be whether they could make Asfari stand aside for the purpose of evaluating and negotiating such a deal.

Certainly newer "major" shareholders such as Toscafund, Richard Griffiths and I think Deutsche Bank, Standard Life and Blackrock (assuming they still have a holding) might be expected to be interested in the quick return that might come from an agreed takeover.

[bouleversee] 18/11/2017 12:00

Woodhawk -

Agreed. That's what I said to myself when the DT article said Asfari was likely to resist. However, I still think that how much of a fight he puts up and at what point he caves in and recommends a t/o will depend on whether there is culpability or not and what legal advice he has received about the chances of getting off. At the end of the day, however, it will depend on how much support he has and the proportion of long term holders (who will want more than 600p) to short trrm traders (who came in after the drop and want a fast buck), and what stand the institutions take, won't it? 600p won't cut it for me but I might get stuck with that. C'est la vie.

Incidentally, Times Business has an article today headed "I wish I hadn't sold Arm, says ex-boss", referring to Stuart Chambers, Arm's former chairman, who said the company was hugely successful and had much further to go and he blamed shareholders looking for short-term returns for the t/o going through. He wouldn't have had a majority interest either, presumably, but the story suggests he could have influenced the deal. I had a decent holding in that as well and voted against. I object to our most successful companies being sold, especially to foreign companies or pension funds, and also because chances are that my proceeds would have been ploughed into something loss-making. I really can't be bothered to check what I did with that money: perhaps it went into CLLN and IRV where I am losing a packet! (appropriate emoji here). Chambers is now chairman of Anglo American (another of my holdings); it remains to be seen whether that will be taken over by Vedanta's Agarwal.

[woodhawk] 18/11/2017 10:45

bouleversee,

It's not necessarily a question of "accepting a low bid" or "throwing in the towel". In their first piece the Telegraph referred to a "hostile" takeover. The bidder would bid enough to win the votes of the majority of the other shareholders. PFC is owned by it's shareholders. Ayman Asfari is a major shareholder (circa 18%) but he is not a majority shareholder.

[bouleversee] 18/11/2017 10:34

Fuji -

Quite so. The point I was trying to make was that accepting a low bid offer at this stage would be tantamount to an admission of guilt, unless of course the SFO cloud, even if unjustified, has had such a deleterious impact on the business that it is essentially devalued, but I can't imagine the management would throw in the towel at this stage if they know they are innocent.

[w1ndjammer] 18/11/2017 10:19

thanks guys all good points re SFO confirmed what i was thinking
next week could get interesting.

WJ.

[fuji99] 18/11/2017 09:50

Bouleverse - If no case is found, then the share price should return to its original value of minimum £8. The share price was battered as it was assumed there was a case. IMO reviewing the results of all possible scenarios, any entry below £5 is a win/win situation for those patient enough to wait but could less than a month. A gain of up to 50% is the bottom line.

[stoxx67] 18/11/2017 09:35

good point Dr

[dr_smith] 18/11/2017 01:17

It wouldn't surprise me if the under-resoucred SFO didn't have the resources to bring a case and defend it against an oil co defended by their highly paid extensive legal team.
The SFO can't be seen to let it go, can't defend with meagre resources so they pick on easy targets, oil company sacks the employees and status quo returned, SFO seen to be doing their role, all happy.
Also... if corruption is endemic in industry any bad outcome would mean all industry is hit.. so all oil industry would likely offer free assistance of their respective legal teams (or money to support the charged co's legal case) to defend any case to the hilt and mitigate repurcussions for all.
IMO :-)

[bouleversee] 17/11/2017 23:29

If there's no foundation in the allegations, I can't see them accepting any takeover offer. Why should they?

[fuji99] 17/11/2017 22:45

If the SFO does not have enough evidence on PFC, the share price could return to almost its original value of around £7 - £8 before the drop and tjis is without any bid. If one adds a bid !!! ???? So IMO, the bids will come quicker to overtake any favourable SFO response which could make PFC too expensive. So they will snap it up before it's too late.

[paa65] 17/11/2017 21:45

W1NDJAMMER - Interesting that the SFO charges all appear to be against individual employees of UnaOil rather than against the company itself. May be the SFO do not have evidence of the company knowing about it and it was just down to rogue employees.
So PFC using Unaoil in the past may not be a problem at all - unless they used the same employees.
Regardless, good to see some SFO progress. Hopefully it won't now take the 4 years that it did to conclude the Rolls-Royce one.

[ny boy] 17/11/2017 18:06

GL blackbear, be nice if one or both come off, this one is first though I feel.

W1NDJAMMER...yeah I posted this link earlier in the day, interesting, all these things are starting to align GL

[w1ndjammer] 17/11/2017 17:38

16 NOVEMBER 2017 • 6:05PM
The Serious Fraud Office has made its first charges against Unaoil employees in relation to a corruption scandal that has engulfed the oil and gas industry.

The SFO said it has charged UK-based Ziad Akle and Basil Al Jarah with conspiracy to make corrupt payments on behalf of Dutch oil services company SBM Offshore in order to obtain contracts for oil projects in Iraq.

[blackbear] 17/11/2017 16:57

NY Boy I bought in today after your post on the IMM thread hope your right on both!

[ny boy] 17/11/2017 16:49

scooper72

Yes 409

I see the share price closed on the 50 day m.a. 433.62

Well let’s see what the weekend and week ahead brings.

Good weekend all

[adejuk] 17/11/2017 16:33

day traders dream at the mo.

[scooper72] 17/11/2017 16:13

Cheers. Good idea. Forgot we can adjust the stops over the close.

[ny boy] 17/11/2017 16:09

I’m more thinking half glass full on this one at present.

Let’s see how much action there is into the close, weekend press perhaps, followed by an announcement Monday, would be great. GLA