Petrofac eyes April restructuring date as convening hearing is postponed

UK-headquartered oilfield services provider Petrofac has provided an update on its proposed financial restructuring.

According to the UK player, the court hearing for the restructuring process was held on February 28, 2025, while the convening hearing was adjourned to March 20 or 21, 2025. Petrofac further added that the court intends to expedite the process allowing the sanction hearing to conclude in mid-April 2025.

In a previous update from February 21, 2025, the group said it secured agreements with financial investors to facilitate the release of $80 million of cash collateral which will be used to secure a performance bond concerning a “key” E&C contract. This is set to replace the provision of new guarantee facilities by a funded creditor the firm had previously announced.

Petrofac also said it expects to upsize the equity raise by $30 million, bringing it to a total of $224 million. This would increase the total new funding raised as part of the restructuring to $355 million.

In addition, the group plans to offer certain creditors the opportunity to participate in the equity raise by up to an incremental $25 million, at the same price as other investors. On the restructuring effective date, the existing shareholders of the company are expected to be allocated 2.2% of the company’s total share capital.

As stated by the UK player, 73.7% of bondholders have now committed to supporting the restructuring plan by agreeing to the lock-up agreement. This represents an increase of around 16.7% since the launch of the restructuring and constitutes over half of the secured creditor class. Discussions with other secured creditors are still ongoing.

Following the convening hearing, the company will start the subscription period during which secured creditors can choose to participate in the new money options available to them under the terms of the restructuring. 

Petrofac announced in late September 2024 that it had reached an agreement in-principle with certain “key” stakeholders on the framework for a comprehensive financial restructuring to strengthen the group’s financial position and better position it to deliver on its strategy.

At the time, the firm explained its directors have been assessing alternative options available since starting the review of the company’s strategic options in December 2023. In their view, this financial restructuring provides the best available outcome for the company and its stakeholders.

The proposed financial restructure comprises several aspects, including new long-term funding underwritten by an ad hoc group of senior secured noteholders and additional equity financing expected to be sourced from new and existing investors, to support operational liquidity.

In December 2024, Petrofac announced that it entered into a binding lock-up agreement with key financial creditors on the terms of a comprehensive restructuring, which formalized the in-principle agreement announced in September.

Apart from being busy with restructuring, Petrofac recently won a $335 million contract for work on ADNOC Gas’ Habshan Complex. Petrofac’s subsidiary is set to build two gas compressor trains, associated utilities, and power systems for the complex that will be connected via pipelines to the UAE giant’s Ruwais LNG project under construction.