Member Info for PaulCurtis

PVC

I’m saying that if Debtholders suffer a loss then the restructuring must value equity at the value of the listing, c, £20-25m or 4p a share.

Find me evidence of a single restructuring where debtholders have suffered a significant loss and the D4E has valued equity at more than the listing value.

It’s basic capital hierarchy, senior debt MUST AWAYS trump equity.

IMO the canary is the bond price because there are so many different parties that there must be leaks.

I believe there are 17 banks re RCF/TL loans plus their advisors

Then the 47% bond holders and their advisors.

When the bond price was 16-18 several weeks ago the implication was dire, that insolvency most likely

Now the bond price has climbed to 23–25 cent so a D4E now looks more likely.

However this still implies that those in the know expect the bonds to still take a pasting. Let’s say 50-60% pasting?

The bonds and all debt is senior and pari passu. I have never come across a restructuring where bonds suffer a loss and equity doesn’t get screwed?

It’s as simple as that? Give me an example if not? Senior debt trumps equity

This 47% has no relevance to the 75% required to vote deal through.

The 47% is the bondholders who have the cash to contribute to the $300m cash raise and have therefore been made inside.

The rest of us have no cash and therefore no control/influence, hence we are not inside. If the deal negotiated by the 47% is the only deal on the table, then all bondholders will eventually accept it.

The only caveat is whether some of the 53% want to go the insolvency route and salvage what they can in cash rather than new equity. See the GC statement

And even more worryingly, why no trading update?

Are they struggling to get all the debtholders to agree to deal?

Are they struggling to get the Performance Guarantees signed off?

Are they waiting on the resolution of the Thai Oil dispute or sale of Malaysia.

And by far my largest concern, are there any hidden nasties that are now being quantified. We know from Wood Group that legacy contracts on thin margins are a potential minefield. Have PFC fully provided for these?

If there was a trading update then they would have to come clean re why the delays……

It has to be ominous that no update?

You ignore reality. PFC have spelt out that a highly dilutive D4E is the most likely outcome. The bonds, which are equally secure to the banks, are trading at only 18 cents on the dollar. PFC is the most shorted share on the LSE despite share price fall. These are facts. The risk reward is lousy

It’s surreal that armchair bulls know better and have ignored these inconvenient realities as irrelevant , allowing irrational group think to dominate.

That really is it! My next post will be after the restructuring when you can thank me for at least trying to warn you!

YB

Fair enough but I honestly think you are grasping at straws. Imo this alternative will involve PFC stumping up cash

I’m saying the D4E will be at circa 4p and will return post restructuring RNS. I hope the mindless rampers will also be here to apologise to everyone if I’m proven correct.

Go to the penultimate paragraph of page 152.

https://www.petrofac.com/media/zn5er2nz/petrofac-fy-2023-financial-statements.pdf

I’ve confirmed with Petrofac that this consent relates to the RCF/TL holders (I believe around 15-20) and I’ve always assumed that this would be a given as turkeys won’t vote for Xmas.

However I assume there was a problem and it took until last Friday to agree sign off.

Mr Dave

Please read the GC statement in respect of this PG

YB

But this customer has not forgone the PG. PFC has only been able to provide it by using their own cash rather than via a consortium of banks. They are now running on empty and can not secure any more PG’s as no more free cash left.

They now have to secure PG’s the conventional way which effectively means borrowing from banks. However they have too much debt and no bank will tough them with a barge pole.

They have to first reduce the debt burden and the only way to do this is via D4E and probably haircuts.

But they can’t do it again. PFC only managed to achieve this PG by putting up a large amount of cash. There is not enough cash left to do this again.

The last PG they secured at YE required PFC putting up $100m of cash. It’s was a desperate act to save the contract.

YB

Please read all the GC relating to this contract. PFC secured the PG by putting up a load of cash as a one off. The whole point of PG’s is to release future cash, not to tie up current cash.

I always expected this to happen since the GC says it’s dependent on the RCF/TL’s agreeing to release the cash from the dwindling cash pile. They can’t do this again, no more free cash. And it’s very cash flow negative whereas the PG’s that they want will be cash flow positive.

They can’t get the banks to sign off on these new PG’s because too much debt. Hence the restructuring and D4E

Hope that makes sense

YB

Go to page 152

https://www.petrofac.com/media/zn5er2nz/petrofac-fy-2023-financial-statements.pdf

Yorkshire

I’m expecting the D4E to be at 4p. The Debtholders are clearly expecting to suffer badly (I’ve just been offered 300K bonds at 18 cents). There is zero chance that Debtholders suffer such pain without equity being diluted to oblivion or wiped out by insolvency.

Ignore Ivor, he’s clueless. Read what the company actually say. They have spelt this all out very clearly. It’s D4E and if this falls though it’s insolvency.

The 47% BH consortium are those that have wall crossed and are offering the $300m rescue finance. The rest of us will accept whatever this is because it’s the only obvious alternative to going bust.

Anyone holding equity should ignore the shameless and brainless ramping on this board and instead go to the Petrofac website and listen to the recent webcast regarding the latest accounts. In particular listen to the Q&A at the end of the Presentation.

Ivor

Please read the Going Concern statement and listen to the accompanying Webcast.

PFC spell out that they can’t survive without a D4E, that they are only surviving short term because they are waiting till the minute to pay creditors.

They make clear that D4E is the only option other than insolvency and they apologise for the dilution that this will inflict on shareholders

The current bond price is 16 - 18 cents!!! Versus par of 100 cents. Ie bondholders are anticipating a massive haircut/

All the debt is senior and pari passu ie equal. This is like the bank mortgage on your house.

The market is saying that your house is only worth 20% of your mortgage!

There’s nothing left for equity other than a very dilutive D4E.

‘The forbearance agreement is entered into by an ad hoc group of noteholders representing approximately 47% of the outstanding senior secured notes and certain other acceding noteholders. It provides assurance that these noteholders will not take any action in respect of the non-payment of the coupon until at least 23 August 2024, providing additional time for the Group’s financial restructuring to be progressed. ‘

By financial restructuring they mean D4E. Why should shorters now close when D4E appears imminent?

How dilutive will this be? If Debtholders are forced to take large haircuts then it will obviously be very dilutive. The current bond price indicates very large haircuts and Debtholders will force Shareholders to accept the bare minimum, the £20m value of the listing, if necessary via a Scheme of Arrangement.

Hopefully the long delay has been the result of trying to secure this PG by getting RCF/TL holders to sign off on it. PFC said they had the cash available but needed the consent of these banks to access it. I believe there are something like 15 to 20 banks so could have been like herding cats.

If this has been the hold up, then the rest of the restructuring could now progress rapidly.

Imo the canary in the coal mine is the bond price and I’ll report the latest price mid morning.

So what exactly has changed!!!

Highly dilutive D4E was and remains the most likely outcome?

Simple question

Mary

You are just a shameless ramper. I suspect you bought in after the RNS and now desperately trying to persuade gullible idiots to push the price higher!

A highly dilutive D4E has been the most probable outcome for months and there is NOTHING in Friday’s RNS to change this.

Look at the bond price!

It’s 17 cents for Gawds Sake versus 100 cent par. This is a fact and indicates what the professionals are thinking.

And remember this. There are circa 15-20 lending banks comprising the RCF/TL group plus multiple Bondholders plus their advisors. ie there’s loads of debtholders ‘inside’ and sworn to secrecy. But with so many there will be leaks as mates tip off mates in the wine bars! It is the way of the world and us private investors are always the last to know.

So ignore the bond price at your peril

Am I being dumb but what’s changed?

We all assumed the 25th June PG had already been secured?

And a highly dilutive D4E is still the most likely outcome. Nothing today changes this?

As a bondholder the only positive for me is that maybe this was the holdup and that the D4E will now follow very shortly. I’m getting very frustrated by all the delays