- The company seeks to strengthen its balance sheet and liquidity in the short term
- Hedge funds have made Petrofac the most shorted stock on London markets
Petrofac could swap a “significant proportion” of its debt for equity as part of a rescue package, the oil services group said on Friday.
The London-listed company is in talks with lenders and investors about ways to restructure its debt and welcome more investment, while negotiating with potential buyers to dispose of non-core assets.
As it told shareholders in December, the company is looking to strengthen its balance sheet and liquidity in the short term, and receive bank guarantees.
Potential deal: Oilfield services company Petrofac said it could swap a “significant proportion” of debt for equity as part of a rescue package
Petrofac has struggled in recent years with mounting losses resulting from cost overruns, write-downs of legacy contracts, payment delays and bribery scandals.
For the six months ending June 2023, the group reported a net loss of $165 million compared to a loss of $39 million in the same period last year.
Hedge funds have made Petrofac the biggest selling stock on the London Stock Exchange, with 11.2 percent of the company’s shares currently short.
As a result, petrofac shares They have plummeted by almost two-thirds in the last year, while their value has fallen by about 94 percent since the beginning of 2020.
The group’s shares were the biggest fallers on the FTSE All-Share index in early trading on Friday, falling 30.1 per cent, or 10p, to 23.3p.
However, Petrofac has continued to win multiple new deals, including a contract extension with ONEgas West for work in the North Sea and a three-year deal with Turkmengas to support operations at the Galkynysh gas field in Turkmenistan.
These follow an £11.4bn offshore wind framework deal awarded last year by Dutch-German power grid operator TenneT.
These contracts have helped increase the company’s order book to $8 billion, worth $3.4 billion by the end of 2022.
He told investors: “While the company continues to face challenges in securing new performance guarantees, it is progressing discussions with credit providers and customers to find solutions regarding the guarantees required for its recent contract awards.”
“Discussions with lenders and other interested parties continue apace and further announcements will be made as appropriate.”