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(Alliance News) - Petrofac Ltd on Tuesday said "active" discussions are progressing with its stakeholders as part of its ongoing review of its strategic and financial options.
These stakeholders include Petrofac's lending group, comprising both bondholders and lending banks, and other capital providers.
Announced in early December, the energy infrastructure company with core markets in the Middle East and North Africa said the review has the objective of "materially strengthening the company’s balance sheet, improving short-term liquidity and securing bank guarantees".
Petrofac also said it is making progress in exploring the sale of non-core assets, as it announced it was considering in early December, while warning it expected to miss its cash flow guidance amid delays in payments.
"Taken together, these actions are being undertaken with the aim of managing the group's payment obligations, supporting the provision of guarantees and ensuring that Petrofac has the appropriate capital structure and liquidity to support the strength of its backlog and future business prospects," Petrofac said.
"The provision of performance guarantees and advanced payment guarantees remains a key driver of near term cashflow for the company, by enabling the receipts of advance payments, releasing cash collateral and reducing future collateral requirements."
Petrofac said negotiations continue with a "broad set of credit providers with a view to obtaining the guarantees contractually required for other recently awarded contracts". It also said discussions "remain ongoing" with clients around the required scale and timing of performance guarantees.
"The company is working to conclude discussions with these counterparties as swiftly as possible. Further announcements will be made as appropriate," Petrofac said.
Operationally, Petrofac said it continues to make good progress with contracts awarded in 2023, increasing its backlog to over USD8 billion.
Petrofac also said it is making "good" progress in closing out its legacy portfolio and unwinding historical working capital.
It said it has continued to maintain liquidity above its financial covenant and will provide further details on its operational and financial performance within its annual results announcement in April.
"Our significant order book, which now stands at over USD8 billion, demonstrates the strength of our proposition to customers and Petrofac's long-term potential. To deliver on this opportunity and position Petrofac for the future, we are focused on plans to materially strengthen the financial position of the group," said Chief Executive Officer Tareq Kawash.
Shares in Petrofac were down 0.9% to 23.38 pence each in London on Tuesday afternoon.
By Greg Rosenvinge, Alliance News senior reporter
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