Petrofac Shares (PFC) Tumbling Today, -27% As Talks with Lenders to Restructure Debt Ongoing

Petrofac (LON: PFC) provided an update today on its ongoing efforts to address its financial situation. The company said it is actively engaged in discussions with various stakeholders as part of a strategic and financial review.

Petrofac shares tumbles out of the gate, trading down more than 27% through the first hour, wiping out all the momentum from the last week. With long-term PFC shareholders now sitting 94.85% in the red over the past 5 years, we take a closer look at what was said.

“The company has engaged and remains in discussions with its lenders to restructure its debt, which would result in a significant proportion of the debt being exchanged for equity in the business,” said Petrofac in its press release.

A key focus for Petrofac is restructuring its debt with lenders. These discussions would result in converting a significant portion of the debt into equity within the company. Additionally, Petrofac is exploring potential further investment from new investors and existing major shareholders.

Discussions regarding the sale of non-core assets are also ongoing.

Petrofac's leadership emphasises managing its payment obligations while securing guarantees needed for recently awarded contracts. The company aims to achieve a capital structure and liquidity level that supports its substantial $8 billion backlog.

While challenges remain in obtaining new performance guarantees, Petrofac is actively working with credit providers and clients to find solutions for its recent contract awards. Discussions with lenders and other stakeholders are progressing “at pace,” the company added.

Despite the firm trying to put a positive face on it, markets are looking for some significant developments here to really shift the momentum into positive territory, and this was not it judging by the reaction. Long-term beleaguered PFC shareholders will likely be watching the wires in anticipation as all parties look for a positive conclusion.