Petrofac (LON: PFC) has unveiled plans to raise $355 million (£280m) in funding as part of a rescue deal that will further reduce shareholder allocation.
The deal being hammered out with lenders will see the oil field services firm “upsize” the amount of equity it plans to raise by $30m to $224m. In total the firm said this would bring new funding raised to $355m.
However, existing shareholders are set to be allocated 2.2% firm’s total share capital as part of the deal, versus the 2.5% outlined in plans announced just before Christmas.
The firm, which has been struggling with debt woes in the wake of a corruption scandal, said it has also secured the release of $80m in to secure a bond on a “key E&C contract”.
This is bigger than the $72m “new performance guarantee” facility outlined in its recue deal update announced on 23 December.
The firm said 73.7% of bondholders have now committed to support the restructuring plan. This represents an increase of around 16.7% since the launch of the effort and constitutes over half of the secured creditor class. It added: “discussions with other secured creditors continue.”
The announcement confirmed that stakeholders will allow the firm to commence with court proceedings that will enable the restructuring deal.
An initial convening deal will take place later this week on Friday, 28 February. This will be followed by a sanction hearing on 26 March. The firm said this means the “restructuring effective date” is expected 31 March.
Announcing the initial terms of the deal before the Christmas holiday, Petrofac chief executive Tareq Kawash said the agreement would provide a “sustainable financial structure” that will allow the group to “move forward with confidence”.
“Bolstered by our current backlog and pipeline of opportunities, the business is well positioned as a leading provider of critical energy infrastructure,” Kawash said.”
“We have made good progress in closing out our legacy portfolio of contracts, our new projects are progressing well, we have a refreshed strategy focused on our strengths, with enhanced bidding discipline and project governance.”
In addition, after overseeing the restructure Petrofac chairman René Médori is set to leave the role this year.
Panmure Liberum analyst Ashley Kelty said the reduction in value for shareholders means they would be “disappointed –but not surprised” and warned it was unlikely the current deal on offer would meet the board’s hopes of settling the firm’s problems.
He said: “Existing holders will be disappointed –but not surprised – at getting squeezed even more. PFC remains a marginal investment at best, with the underlying weakness in the business model still present. It would not be a surprise if it needed to be restructured again in the future.”
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