Beleaguered oil field services group Petrofac (LON:PFC) has struck a deal to delay payment to lenders another month as the debt-burdened firm continues its restructuring plan.
The group announced today it has extended its existing forbearance agreement on the “non-payment” of an interest coupon on its senior secured notes that was initially due on 15 May 2024 with just less than half of its lenders.
Petrofac said a group of note holders, representing around 47% of the outstanding senior secured notes “and certain other acceding noteholders” had agreed to shift the payment deadline from 15 November to 13 December 2024.
Petrofac added the extension also extends to the non-payment of the interest coupon that was due on 15 November 2024.
The payment delay comes despite having come to an agreement with lenders – the 47% “ad hoc” group – on a rescue deal in September.
The deal will see the majority of existing debt swapped into equity, which will result in “significant dilution of the existing shareholders, the extent of which is still to be agreed”.
Petrofac has been struggling with rising debt, having missed a 30-day grace period on a coupon that was supposed to be paid 15 May on $600m loan notes due in 2026.
This saw the company initially miss the deadline to deliver its full year report for 2023, resulting in a temporary suspension of trading in its shares.
The company reported a $505 million net loss in its delayed full-year financial results for 2023, while its net debt reached US$583mn.
The company has been looking to sell some of its non-core assets to provide fresh capital.
However, the company has managed to hold its revenues steady, coming in at $2.5 billion in 2023 compared to 2022’s $2.6bn. It has also been successful in securing major contracts to grow its order book and create the promise of future returns.
The company took a further hit this year as ratings agency Fitch downgraded it to “restricted default” (RD) from C due to the missed interest payment.
Petrofac is seeking a financial restructure to improve liquidity and secure bank guarantees to support current and future contracts, and is in talk with lenders to see some of the debt swapped for equity.
In it’s statement, Petrofac added: “The attention of investors is drawn to the company’s previous market announcements for additional information surrounding the proposed financial restructure which the board and management continues to progress at pace. Further information will be shared as appropriate.”
Panmure Liberum analyst Ashley Kelty said the further delays will be making investors who could face a bondholder wipeout in shares “nervous”.
In a note he said: “This has dragged on for some months and doesn’t appear to be any closer to a resolution.
“The extension of the agreement now also includes the non-payment over the November coupon that was due last week.
“Outlook remains challenging and equity investors are probably getting increasingly nervous over the terms of any deal that may be agreed.”
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