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PFC Petrofac Limited

26.50
-6.82 (-20.47%)
12 Apr 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Petrofac Limited LSE:PFC London Ordinary Share GB00B0H2K534 ORD USD0.02
  Price Change % Change Share Price Shares Traded Last Trade
  -6.82 -20.47% 26.50 36,358,012 16:35:00
Bid Price Offer Price High Price Low Price Open Price
25.40 26.10 27.12 21.90 24.80
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Oil & Gas Field Services,nec USD 2.59B USD -310M USD -0.5996 -0.44 134.94M
Last Trade Time Trade Type Trade Size Trade Price Currency
18:45:03 O 45,186 25.362 GBX

Petrofac (PFC) Latest News (2)

Petrofac (PFC) Discussions and Chat

Petrofac Forums and Chat

Date Time Title Posts
14/4/202423:37Petrofac39,697
16/2/202413:23Lodgeview must be right5
19/1/202407:58Any targets8
14/12/202208:46*** Petrofac ***247
22/10/201622:17Analysts' Viewpoints on Petrofac (PFC)-

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Posted at 14/4/2024 09:20 by Petrofac Daily Update
Petrofac Limited is listed in the Oil & Gas Field Services,nec sector of the London Stock Exchange with ticker PFC. The last closing price for Petrofac was 33.32p.
Petrofac currently has 517,000,000 shares in issue. The market capitalisation of Petrofac is £134,937,000.
Petrofac has a price to earnings ratio (PE ratio) of -0.44.
This morning PFC shares opened at 24.80p
Posted at 13/4/2024 22:05 by jaknife
ryad123,

"@jaknife can you explain how do you get the 4p figure from, you seem to be assuming that after the bond holders taking a haircut along with a fresh equity cash injection, the valuation will remain the same, as if the business will be worth the same even though it has less debt, dilution means the percentage of ownership shrinks not necessarily loss in absolute money terms, unless you are saying that 26p a share is misguided and the market is still mispricing pfc."

I explained that in post 39,411 here:



Yes "26p a share is misguided and the market is still mispricing PFC". But this is quite normal. If you look back at every major D4E swap you will find that it takes time for shareholders to come to terms with the situation and to realise that the position is not what they thought. It is very similar to the five stages of grief (denial, anger, bargaining, depression and acceptance:

Note, for example, that just days ago, posters here were (very rudely) telling me that my forecasts of a D4E swap were completely wrong ... now the question is "at what price is the D4E swap going to take place?". Shareholders are always slow to realise what exactly a D4E swap means for a company.

The simple fact is that, unless the bondholders graciously agree to swap some of their debt for equity, then Petrofac is insolvent. And if the bondholders aren't going to get repaid in full then why on earth should they agree to a cushy deal where shareholders get to retain a chunk of the company? Do you think that bondholders/bond funds are charities?


"Would you agree that the price action in the last week is weird, who was scooping up the shares that were being dumped?""

No. And I think that I answered that in 39,438:



There was an element of a short squeeze at the start of the week as the cost of borrow for PFC stock has soared to 85% and so some of the shorts decided to call it a day and close their positions.


"Also how do you explain the contracts being awarded in the last few months, were all these companies mistaken about the financial health of pfc? "

You (and many of Petrofac's retail shareholders) have completely misunderstood this point. It is common practice within PFC's industry that ANY important contact is guaranteed by a bank. The two big contracts that were announced on 20 Dec, for example:



"Further to the Group’s market update on 4 December, today’s announcement coincides with confirmation that Petrofac has secured the performance guarantee required for the Ijmuiden Ver Alpha contract."

had bank guarantees. The peculiarity with those contracts was that the only reason that the banks gave those guarantees was that Petrofac gave the banks cash collateral to mitigate their credit exposure to Petrofac.

So the clients didn't make a mistake about the financial health of PFC, they explicitly made no assumption whatsoever about Petrofac's financial health, they got a bank to provide protection against ANY financial problems that Petrofac might have!

The whole topic of financial guarantees is the one that forced Petrofac's hand and made them finally admit that they had a problem. The banks are no longer prepared to provide guarantees to support PFC's business unless PFC provides cash collateral for those guarantees. And whilst PFC did that with the two announced on 20th Dec it also admitted that that was not a reliable long term solution.


"Last but not least metro share price didn't move much from around 35 p, the share dropped from 100p but that was before D4E was made public knowledge. Any thoughts on that Mr Jaknife?"

The Metro Bank transaction was more complicated than a normal D4E swap and it's one that I decided to not get involved in. I would defer to WShak's greater expertise on Metro Bank. But the big difference was that the Central Bank got involved and threatened the subordinated bondholders with a bail-in unless they agreed to a debt for equity swap and it all seemed to get forced through on that basis over a weekend.

JakNife
Posted at 13/4/2024 19:23 by ryad123
@jaknife can you explain how do you get the 4p figure from, you seem to be assuming that after the bond holders taking a haircut along with a fresh equity cash injection, the valuation will remain the same, as if the business will be worth the same even though it has less debt, dilution means the percentage of ownership shrinks not necessarily loss in absolute money terms, unless you are saying that 26p a share is misguided and the market is still mispricing pfc. Would you agree that the price action in the last week is weird, who was scooping up the shares that were being dumped? Also how do you explain the contracts being awarded in the last few months, were all these companies mistaken about the financial health of pfc? Last but not least metro share price didn't move much from around 35 p, the share dropped from 100p but that was before D4E was made public knowledge. Any thoughts on that Mr Jaknife?
Posted at 13/4/2024 12:06 by armbar
This is being played a beauty and has been on the cards for some time.When tareq arrived and he kitchen sinked I thought ok , then he done it again after the TenneT first contract.It was at that point I asked directly to substantiate why , very unusual , as there was no reason to again cause another share price drop and kitchen sink it twice.No responseThis has been played for a while, what they could not allow is the share price to run away into 3 figures, from 80 when the other contracts landed , reason why because they want Petrofac , want it cheap , who , the Middle East where in reality it is its homeWant the TenneT contract $8bn , the $60 pipleine , the associated discounted cash flow, just imagine cash flow on 10-20bn , the strategic importance to Uae, Europe , ME, renewables global sector, they want to be the leader So that is why PFC will be taken cheap any methods to acquire , dirty tactics imoBuild it up to 9000 employees secure contracts like TenneT, feed studies Take it by hook or by crookQuestion is how , how much it wont be pretty ME all day
Posted at 13/4/2024 08:49 by armbar
Agreed been saying it for a whileSomeone wants PFC and wants it cheap , Middle East for all the reasons I have stated for several months, PFC has huge value , wind eg TenneT solution ,TenneT alone is $8bn 6 systems the feed study suggests europe need 20 Masdar the renewable arm Adnoc are JV eg RWE 11bn Seagreen perfect fit See the sustainability plans for ME Hydrogen and carbon capture first of kind at Habshan Adnoc with PFCAmmonia and OCi This has been played a beauty imo , leak, fud , shorts done their job but if they get too greedy then will be punished.Proxy battle hostile or the BOD founder are facilitating the controlling share requirements , share price rising needed to slow it down or if it broke ranks share price would fly short squeeze be near the offer price , then looks unattractive , Middle East Andoc , ME Banks imoEnterprise value £1.20 ish Discount cash flow valuation higher But that is not what they will pay imo 80p max imo Always said interesting that PFC chose Teneo and Moelis the same as Adnoc, Adnoc ipo logistics and services division raising last year $770MPFC fit in seamlessly 1.4.24 ceo adnoc gas We aim to expand internationally by acquiring new positions in the gas value chain, targeting opportunities in Europe, India, China and South-East Asia if they add value to our business.Just think how PFC fits in Just my opinion takeover or controlling stake
Posted at 12/4/2024 12:51 by pogue
Armbar
I am struggling to read your posts, are you suggesting ADNOC will bid for PFC?
If so you have zero knowledge of the oil and gas contracting business. I have some having spend 30 years in it and have worked for both ADNOC and PFC in the past. There is no way a national oil company will buy a contractor they do not have the workload for them to keep them occupied and I dont see other oil companies asking ADNOC to run their projects so its a waste of time and money.
The only bidder for PFC would be another contractor but they wont want to take on the contract pipeline PFC have accumulated as they have bought the jobs by underbidding cost price to keep the work rolling in. Regards renewables all the major contractors are doing those projects nowadays.
There is no value for anyone buying PFC unless its at a huge discount to compensate for the trouble sorting out its projects that are returning negative profits.
Listen to those who understand how this is going to play out and save yourself some money.
Posted at 12/4/2024 09:28 by jaknife
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
Posted at 11/4/2024 11:47 by jaknife
Leoneobull,

"I'm guessing JN your 4p d4e fantasy is looking unlikely presently judging by price action"

Where you see "price action" that confirms your personal view I simply see "noise within an overall trend".

If you look back at EVERY major capital restructuring/D4E swap over the years you will see that in the closing death throes the share price was incredibly volatile.

1. At one point in July 2019 the share price of Thomas Cook more than trebled from c. 3.5p to 12p on speculation that a Turkish entrepreneur was going to takeover the company. Longs added to their positions as they thought that the price action meant that the company was going to be rescued. TCG was put into liquidation in September 2019.

2. On 1 November 2022 the share price of Cineworld incomprehensibly soared from 2.4p to 8.9p (+270%!) on news that its Chapter 11 plan had been approved. Again longs scrambled to buy as the price action made them think that Cineworld was being saved. The Chapter 11 plan actually set out in clear language that shareholders were going to get nothing, which finally happened nine months later.

3. In its dying days of February 2022 the McColl's share price climbed from 1.6p to a peak of 4.7p (c. +200%) because shareholders thought that "banks are supportive" meant something positive for shareholders. Retail punters piled in to jump on the price action only to see the share price crash on news of administration, suspension and total wipe out.

You forget, I've been here since 120p pointing out Petrofac's issues:

* The business has been horribly unprofitable for many years losing over $1bn in the last nine years
* The balance sheet is hopelessly weak despite a $275m capital raise in October 2021
* Since that capital raise PFC has lost almost twice the $275m that was raised
* Despite a large advance order book Petrofac is still forecast to make a loss in 2024
* The banks are explicitly no longer "supportive" and want repaying in full
* And they also want the balance sheet restored before they'll advance performance bonds (the "guarantees")
* The international bond market wants to be paid an interest rate of over 70% in order to assume Petrofac credit risk

None of the above has changed, if anything the issues have got worse and the problems have got worse.

I am unmoved in my forecast of a 4p D4E swap. Share price volatility does not actually constitute "news" as many retail punters seem to think!

JakNife
Posted at 07/4/2024 10:35 by armbar
Follow on , from below , now danger is do they let PFC default and acquire even cheaper but recent SFO would mean probably another investigation with banks creditors, plus it is illegal fraudulent and will cause huge issues.How do Adnoc get PFC on the cheap 1. MBO buy out remaining 70% take private or you could take into a public company this is possible 2. Hostile takeover makes me think schroders shares 30M and shorts 60M and the noise last 6months plus maybe also a share swap at an agreed price with Asfari then buy the rest at a cheaper price 3. Straight takeover but need votes likes of Ayman Asfari founder BOD, Azvalor at what price , AA paid 115p $38M unless do a private deal swap above 4. Cash injection and Structure with equity shares, convertibles , warrants , private deal , with a view to making a cash injection now and continue to build their stake from non controlling stake to controlling , maybe with the share swap option Asfari now or later 5. Renegotiate the RCF terms and bonds and await whilst building their stake to eventually acquire 6. Now Equity raise is there , maybe a private deal cash injection , share swaps build a position , 7. D4E at as I have said previous 15-20p but would be latter options for obvious reasons for major shareholders even at 20P shorts have 60M plus to buy back to make the most of their gains , what happens to the share price ? Domino effect Now the benefit of having BOD, Asfari founder has 85M shares is he will want what is best for him, he has influence , has touted for a while about exiting PFC, question is the price and how this happensSell non core assets raising cashClose legacy contacts cash Once above complete opens the doors for acquirers , JV and reduces their riskQuestion JV or Takeover but it wont be pretty as they will want it as cheap as possibleFinally GL stay healthy and blessed
Posted at 27/3/2024 09:30 by jaknife
wellbutpoor,

"Jak and Loglorry have gone extremely quiet and it would be good to know their view."

Nothing has happened to change my view. I have nothing to contribute that I haven't already written.

I don't subscribe to the view that, just because the share price has changed a little in the last few days, then "somebody knows something". I subscribe to the view that, in every situation like this that I've ever encountered, the share price can be extremely volatile. It's impossible to know the motivations of other buyers and sellers so you simply need to focus on what you know yourself and why your position is what it is.

In particular it frequently seems that the closer you get to the end game the more inexperienced retail punters become attracted to the stock who seem to think that if you type "it's going to the moon", "burn shorts" and rocket emojis then they will be able to sucker others into buying and therefore push the price up. They may achieve a movement in the short term but in the long term the price effect of the recapitalisation event will always prevail!

JakNife
Posted at 21/3/2024 10:53 by loglorry1
Leon the share price is about 6p off all time lows. A strong sales pipeline may as well be no sales pipeline at all if PFC has no balance sheet to execute it. If JN did increase his short all the way down it's proving to have been a very good strategy so far.

Banks don't "cut companies slack" because they are not in it for the upside. Their upside is capped and so they are laser focussed on avoiding losses. A bank runs extremely high leverage on its equity therefore it is imperative they don't suffer losses from loans. JN used to be banker for many years so he knows exactly how they think.

They are not in the "cutting people slack" business. They have already been accommodating. They will simply deploy the best strategy to ensure getting their money back with the minimum risk and that means forcing PFC to sort out it's balance sheet.

Personally, I'd like to see the share price higher so I can sell more but you have to face facts.
Petrofac share price data is direct from the London Stock Exchange

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