(Alliance News) - Petrofac Ltd on Tuesday reported deteriorated profitability in the first half of 2021 amid challenging market conditions.
In addition, the company proposed equity raising of USD275 million. The net proceeds of the equity raise, together with other components of the refinancing plan, will be used to reduce indebtedness and to pay the GBP77 million penalty imposed by the Crown Court in relation to the Serious Fraud Office investigation.
In May 2017 the regulator launched an investigation into Petrofac in relation to seven historic offences of failing to prevent former Petrofac employees from offering or making payments to agents in relation to projects awarded between 2012 and 2015. All employees involved in the charges have left the business and the court acknowledged Petrofac's corporate reform through the transformation of the company's leadership, personnel, compliance and assurance processes. The investigation concluded on October 4.
Petrofac's refinancing plan, which becomes effective upon completion of the equity raising, includes entry into a new USD180 million two-year revolving credit facility and a USD500 million debt bridge to a bond. Furthermore, the USD90 million term loan with Abu Dhabi Commercial Bank will be repaid and replaced with a new USD50 million term loan, maturing in October 2023.
The London-based oilfield services provider said revenue for the six months to June 30 totalled USD1.60 billion, down from USD2.10 billion posted for the first half of 2020. Net loss widened to USD86 million from USD78 million year-on-year.
"While the first half performance reflects the challenges of the market and Covid-19, we have continued to deliver successfully for clients and enhance our delivery capability," said Petrofa Chief Executive Sami Iskander.
"The group has a strong bidding pipeline which includes significant opportunities in new energies, and contract awards are expected to accelerate in 2022. This supports our ambitious medium-term objectives, which will create significant shareholder value over the coming years," added Iskander.
In April 2020, the company suspended the payment of the final dividend in response to the Covid-19 pandemic and the fall in oil prices. Under the terms of the new debt facilities, the company will be permitted to pay dividends from January 2023, subject to the satisfaction of some covenant tests.
Petrofac shares were down 21% on Tuesday morning in London at 125.34 pence each.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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Petrofac (PFC)