PETROFAC ANNOUNCES IN-PRINCIPAL FINANCIAL RESTRUCTURING AGREEMENT

PETROFAC ANNOUNCES MASTER FINANCIAL RESTRUCTURE AGREEMENT

Petrofac announces today that it has reached agreement in principle with certain key stakeholders on a comprehensive financial restructuring framework to strengthen the Group’s financial position and better position it to execute its strategy.

The proposed financial restructuring includes:

New financing: new long-term financing guaranteed by an ad hoc group of senior covered bond holders as previously announcedas well as additional equity financing to be obtained from new and existing investors, to support operational liquidity.
Deleveraging: conversion of most of the Company’s existing debt into equity through a Court-approved restructuring process, resulting in significant dilution to existing shareholders, the extent of which remains to be agreed.
Customer support: alternative arrangements with certain key clients to meet performance security requirements rather than performance guarantees, in order to protect key contracts in the Group’s portfolio, releasing a significant portion of retentions to Petrofac.
Guarantees: Reduced guarantee requirement of approximately $100 million of new performance security for a contract awarded in 2023, to be secured by a new performance bank guarantee or alternative arrangements.

Agreement has been reached in principle with interested parties, including an ad hoc group of senior covered note holders (representing approximately 47% of the outstanding notes, the “Ad Hoc Group”) and the clients referred to above, whose contracts represent the bulk of the E&C backlog and a number of opportunities .

The Group is also continuing discussions on the proposed financial restructuring with its bank lending group and its two largest shareholders (representing approximately 34% of Petrofac’s share capital), who continue to support the Group’s efforts to strengthen its financial position.

The financial restructuring will ensure performance security requirements for Petrofac’s existing order book are met, strengthen its balance sheet and provide a capital structure and improved liquidity that will support the Group in executing its order book and capitalizing on future growth opportunities. This would also provide a runway for the subsequent gradual improvement of access to guarantees for new EPC contracts on normal commercial terms.

The agreement is, in principle, non-binding, and the elements of the proposed financial restructuring are mutually conditional and dependent on the fulfillment of conditions (including the resolution of certain historical liabilities of the Group in a manner satisfactory to the Ad Hoc Group and other secured creditors of the Company). As already disclosed, the implementation of the proposed financial restructuring is subject to reaching an agreement with the Company’s lenders, adoption of certain shareholder resolutions and approval by the Court.

The Board and management continue to engage constructively with the Company’s creditors, key customers and other interested parties to conduct due diligence and agree and finalize the terms of the financial structure, as well as securing the necessary equity and debt financing and performance bonds.

Since initiating the review of the Company’s strategic options in December 2023, the Directors have conducted a detailed assessment of the alternative options available to the Company and believe that this financial restructuring provides the best available outcome for the Company and its stakeholders.

The Group continues to closely manage its financial and commercial payment obligations and, as previously reported, relies on the forbearance provided by creditors. The Group’s ability to carry out financial restructuring is not guaranteed.

The company intends to announce a lock-up agreement with final terms in the coming weeks. The legal process is expected to take about two months from the conclusion of the blockade agreement.

The Company anticipates publishing its interim financial results for the six months ended June 30, 2024 on Monday, September 30, 2024. Investors’ attention is drawn to the Company’s previous market announcements.

René Médori, chairman, said:

“While we are not yet at the finish line, this is a significant step towards concluding a transaction with creditors that will significantly reposition Petrofac with a stronger balance sheet and improved liquidity.

“The Board has thoroughly explored options for securing a strong future for the Group and today’s announcement follows months of extensive negotiations. We recognize the role each of our stakeholders plays to deliver this crucial next step for the company. On behalf of the Board and thousands of our people around the world, I would like to thank you again for the continued support of our shareholders, customers and creditors at this important time.”

Tareq Kawash, group CEO, said:

“This overall agreement with our stakeholders demonstrates their confidence in the business, the strength of our team and our delivery capabilities. Of course, there is still work to be done and many of our employees are working hard behind the scenes to complete the milestones outlined in today’s announcement, while also making progress in closing existing contracts and accumulating historic working capital. The new E&C portfolio is performing well, with Asset Solutions securing over $1 billion in new work this year. I thank our team and all our external stakeholders for their efforts in ensuring a more positive future for Petrofac.

ENDS

For further information please contact:

Petrofac:

James Boothroyd, Director of Investor Relations

[email protected]

Sophie Reid, Group Director of Communications and Culture

[email protected]

Teneo (for Petrofac):

+44 (0) 207 353 4200

[email protected]

NOTES FOR EDITORS

Petrofac

Petrofac is a leading international services provider to the energy industry, with a diverse client portfolio that includes many of the world’s leading energy companies.

Petrofac designs, builds, manages and maintains oil, gas, refining, petrochemical and renewable energy infrastructure. Our goal is to enable our customers to meet the world’s changing energy needs. Our four values – motivation, agility, respect and openness – underpin everything we do.

Petrofac’s core markets are in the Middle East and North Africa (MENA) and the UK North Sea, where we have built a long and successful track record of safe, reliable and innovative delivery, underpinned by a cost-effective local delivery model with a strong focus on local value. We operate on several other significant markets, including: in India, Southeast Asia and the United States. We employ 8,500 people in 31 offices around the world.

Petrofac is listed on the London Stock Exchange (symbol: PFC).

Additional information can be found on the Petrofac website at www.petrofac.com