DJ Petrofac Limited: Proposed Fully Underwritten USUSD275 Million Firm Placing and Placing and Open Offer
Petrofac Limited ( PFC) Petrofac Limited: Proposed Fully Underwritten USUSD275 Million Firm Placing and Placing and Open Offer 26-Oct-2021 / 07:26 GMT/BST Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.
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26 October 2021
NOT FOR RELEASE, PUBLICATION, TRANSMISSION, DISTRIBUTION OR FORWARDING, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, THE COMMONWEALTH OF AUSTRALIA, ITS TERRITORIES AND POSSESSIONS, EACH PROVINCE AND TERRITORY OF CANADA, JAPAN, SWITZERLAND AND THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO.
PLEASE SEE THE IMPORTANT INFORMATION AT THE END OF THIS ANNOUNCEMENT.
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND DOES NOT CONSTITUTE A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT. NOTHING HEREIN SHALL BE CONSTRUED AS ANY OFFER, INVITATION OR RECOMMENDATION TO PURCHASE, SELL OR SUBSCRIBE FOR ANY SECURITIES IN ANY JURISDICTION AND NEITHER THE ISSUE OF INFORMATION NOR ANYTHING CONTAINED HEREIN SHALL FORM THE BASIS OF OR BE RELIED UPON IN CONNECTION WITH, OR ACT AS AN INDUCEMENT TO ENTER INTO, ANY INVESTMENT ACTIVITY.
ANY DECISION TO PURCHASE, SUBSCRIBE FOR, OTHERWISE ACQUIRE, SELL OR OTHERWISE DISPOSE OF SECURITIES MENTIONED HEREIN MUST BE MADE ONLY ON THE BASIS OF THE INFORMATION CONTAINED IN AND INCORPORATED BY REFERENCE INTO THE PROSPECTUS.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/ 2014 (AS IT FORMS PART OF THE LAWS OF THE UNITED KINGDOM BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED FROM TIME TO TIME) ("UK MAR"), AND IS DISCLOSED IN ACCORDANCE WITH THE COMPANY'S OBLIGATIONS UNDER ARTICLE 17 OF UK MAR.
Proposed Fully Underwritten USUSD275 Million Firm Placing and Placing and Open Offer
Petrofac Limited (the "Company" or "Petrofac") today announces a proposed issuance of equity, by way of a Firm Placing, Placing and Open Offer (together, the "Capital Raise") in order to create a long-term, sustainable capital structure.
The Company intends to raise gross proceeds of approximately USUSD275 million (GBP200 million), through the issuance of, in aggregate, up to 173,597,412 ordinary shares in the capital of the Company (the "New Shares"), at an issue price of 115 pence per New Share (the "Issue Price"). The Issue Price represents a discount of 27.2 percent to the closing share price of 158 pence on 25 October 2021.
Key Highlights
-- The USUSD275 million Capital Raise is part of a wider refinancing plan (the "Refinancing Plan") announcedtoday, comprising:? USUSD500 million bridge financing facility expected to be replaced or refinanced by way of a publicbond issuance, expected to be launched later today; - USUSD180 million new revolving credit facility; - AEDUSD185 million (USUSD50 million) new bilaterial facility; and - an amendment of a USUSD50 million existing bilateral term loan facility.
-- Proceeds from the Capital Raise will be used, alongside the Refinancing Plan and available cash reservesto:? Pay, in January and February 2022, the USUSD106 million (GBP77 million) penalty imposed in relation tothe SFO investigation; and - Repay existing indebtedness.
-- These actions will extend Petrofac's debt maturities and strengthen the Company's platform to execute itsstrategy.
-- The Capital Raise will be effected by way of a Firm Placing of USUSD138.0 million (GBP100.2 million) and aPlacing and Open Offer of USUSD137.0 million (GBP99.4 million).
-- Ayman Asfari has irrevocably committed to invest at least USUSD38 million in the Capital Raise and to votein favour of the corresponding resolutions at the General Meeting.
-- All directors in addition to Mr Asfari have committed to invest in the Company, in connection with theCapital Raise at the Issue Price.
Petrofac Chairman René Médori said: "Support from all our shareholders and debt providers in the refinancing plan will provide the company with a stable platform from which to grow and look to the future with confidence. I welcome the continuing support of our largest shareholder and fellow Board member Ayman Asfari, as Petrofac moves on to the next chapter of its history."
Sami Iskander, Group Chief Executive of Petrofac, said: "Petrofac has a tremendous opportunity over the coming years to grow and re-establish itself as one of the world's leading providers of critical services to the energy industry. Following a quieter period during the pandemic, we see activity in our markets increasing significantly at a time when the full potential of our business has been unlocked - in recent years we have refocused on compliance, rebased our cost competitiveness, and now we are re-energised under a new team and a new strategy. The completion of the financing will cement a fantastic platform from which I am confident that we will deliver significant shareholder value over the coming years."
Ayman Asfari said: "I am pleased to support today's fund raise which, after more than four difficult years, puts the company squarely back on the path to recovery. I look forward to Sami and his leadership team restoring Petrofac to its greatest potential."
The Firm Placing and Placing are being conducted by way of an accelerated bookbuild process (the "Bookbuild"), which will be launched immediately following this announcement (the "Announcement") and is subject to the terms and conditions set out in the appendix to this Announcement (which forms part of this Announcement) (the "Appendix").
Goldman Sachs International ("Goldman Sachs") and J.P. Morgan Securities plc ("J.P. Morgan") are each acting as Joint Bookrunner, Joint Underwriter and Joint Global Coordinator (together the "Joint Bookrunners") to Petrofac in connection with the Capital Raise. J.P. Morgan is acting as Sole Sponsor to Petrofac in connection with the Capital Raise.
Background to and reasons for the Capital Raise
Petrofac is a leading provider of services to the global energy industry, with a 40-year track record of designing, building, managing, and maintaining energy infrastructure. The Group has particular expertise in engineering, procurement and construction of major facilities for the oil & gas and renewables sectors, in addition to a strong operations and maintenance focused business operating in the UK North Sea and internationally.
In May 2017 the Serious Fraud Office ("SFO") announced an investigation into Petrofac. The investigation concluded on 4 October 2021, when Southwark Crown Court imposed a penalty of GBP77 million in relation to seven historic offences of failing to prevent former Petrofac employees from offering or making payments to agents in relation to projects awarded between 2012 and 2015, contrary to Section 7 of the UK Bribery Act 2010. All employees involved in the charges have left the business and the Court and the SFO acknowledged Petrofac's corporate reform through its transformation of the Company's leadership, personnel, compliance and assurance processes.
Under new leadership, Petrofac has continued to prioritise ethical business conduct and a comprehensive governance regime. Following his appointment as Chief Executive on 1 January 2020, Sami Iskander developed a new strategy based on best-in-class delivery, returning the Company to growth and generating superior returns. This strategy was communicated on 20 April 2021 at Petrofac's full year results, and encompassed the Company's plans for growth in its traditional core oil & gas markets alongside an accelerated focus on new energies, particularly in those segments aligned to Petrofac's core capabilities, in offshore wind, carbon capture and storage, waste-to fuels/energy and hydrogen.
The resolution of the SFO investigation is expected to unlock significant opportunities for Petrofac. The Company has identified an annual addressable market growing to USUSD105 billion by 2025 with a bidding pipeline of USUSD46 billion of opportunities scheduled for award by the end of 2022, including USUSD7 billion of opportunities in new energies. Contract awards are expected to accelerate in 2022, following a period of underinvestment by the industry during the COVID-19 pandemic and supported by a stronger commodity price environment.
The Directors believe Petrofac's refreshed leadership, improved systems and clear strategy leave it well positioned to pursue material opportunities in both core markets and new energies, positioning the group to deliver growth and superior returns. Petrofac's strategy aims to deliver revenues of USUSD4-5 billion (with more than 20% from new energies), consistent premium margins and a strong balance sheet with a net cash position over the medium term. This strategy is expected to deliver significant shareholder value creation.
The Refinancing Plan will create a long-term, sustainable capital structure for the Company with appropriate leverage and a maturity profile that supports its strategic plan.
Comprehensive Refinancing Plan To Deliver The Company's Strategy
In connection with the Capital Raise, the Company is implementing a comprehensive Refinancing Plan to create a sustainable long-term foundation for the Company to execute its strategy from. In addition to the Capital Raise, the Refinancing Plan comprises: (i) a USUSD500 million bridge financing facility which the Company expects to replace or refinance by way of public bond issuance, (ii) a USUSD180 million new revolving credit facility, (iii) a AEDUSD185 million (USUSD50 million) new bilaterial facility, as well as (iv) amendment of an existing USUSD50 million bilateral term loan facility.
The Company intends to use the proceeds of the Capital Raise, in combination with the proceeds from the bridge facility (or the public bonds which replace or refinance it), the new bilateral facility and available cash reserves in order to pay, in January and February 2022, the GBP77 million penalty imposed by the Southwark Crown Court in relation to the SFO Investigation and to repay indebtedness under its existing revolving credit facility (USUSD546 million), an existing bilateral term loan (USUSD90 million), and its commercial paper issued under the CCFF (GBP300 million). Had the Capital Raise taken place as at the last balance sheet date, being 30 June 2021, adjusted for the draw down on the revolving credit facility which increased by USUSD196 million between June 2021 and September 2021, the effect on the balance sheet would have been to decrease Petrofac's pro forma net debt to USUSD172 million. In the same period cash increased by USUSD3 million, however cash increase is not included in the pro forma net debt.
The Refinancing Plan aims to deliver the Company's key objectives of:
-- reducing indebtedness;
-- diversifying the Company's sources of capital by accessing the debt capital markets; and
-- extending the maturity profile of the Petrofac's financing arrangements, providing the Company withlong-term certainty, flexibility, balance sheet strength, improved liquidity, and ultimately an appropriate capitalstructure to deliver its strategy.
The Directors believe that successful delivery of the Company's strategy, together with the implementation of the Refinancing Plan, will enable Petrofac to grow its businesses and generate increased surplus cash flow with a view to further deleveraging the Company, while providing a platform for the Company to resume dividend payments in the future. The Petrofac Board, having carefully considered the available alternatives, believes that the Refinancing Plan is the best solution available to support delivery of the Company's strategy.
Highlights of the Capital Raise
The Company proposes to raise aggregate gross proceeds of approximately USUSD275 million through the issuance of, in aggregate, 173,597,412 New Shares, at the Issue Price comprising:
-- 87,119,226 New Shares through a Firm Placing, raising gross proceeds of approximately USUSD138.0 million atthe Issue Price (the "Firm Placing Shares"). The Firm Placing Shares are not subject to clawback and are not partof the placing and open offer; and
-- Up to 86,478,186 New Shares through a Placing and an Open Offer, raising gross proceeds of approximatelyUSUSD137.0 million at the Issue Price ("Open Offer Shares").
Under the Open Offer, Qualifying Shareholders will have an entitlement of one New Shares for every four existing ordinary shares held.
The Firm Placing and Placing are fully underwritten and are being conducted by way of an accelerated bookbuild process, which will be launched immediately following this Announcement and is subject to the terms and conditions set out in the Terms and Conditions to this Announcement.
The Capital Raise is conditional upon, amongst other things, shareholder approval for the issue of New Shares.
Shareholders who do not acquire New Shares in the Open Offer will experience dilution in their ownership of approximately 33.5 percent and shareholders who take up their Open Offer Entitlement in full will experience a dilution of approximately 16.8 percent as a result of the Capital Raise and Director Subscriptions.
Director Commitments
Ayman Asfari, Non-Executive Director, and family hold in aggregate approximately 19% of the shares in the Company. Mr Asfari and family have provided an irrevocable commitment to invest at least USUSD38 million into the Capital Raise, which they intend to achieve through participation in both the Firm Placing and the Open Offer. Mr Asfari and family's ultimate participation may increase from this level but will not exceed the pro-rata entitlement related to their aggregate shareholding
Ayman Asfari and family's participation in the Capital Raise is a related party transaction and is of sufficient size to require independent shareholder approval.
In addition, all directors other than Mr Asfari, have committed to invest in the Company, in connection with the Capital Raise at the Issue Price, pursuant to a direct subscription with the Company for the purchase of additional shares (the "Director Subscriptions").
Mr Sami Iskander, who does not currently hold any shares in the Company following his appointment as CEO earlier in the year, has committed to subscribe for shares at the Issue Price for an aggregate price of GBP250,000.
All other directors have committed to subscribe for shares at the Issue price, at a minimum, pro-rata to their shareholdings acquired by virtue of their position as directors or as employees of the Company. In aggregate, 308,673 shares are expected to be issued by the Company to the directors.
Each director is a related party of the Company. However, due to the size of the individual subscription relative to the Company's market capitalisation, the Director Subscriptions are exempt from the rules regarding related party transactions.
Publication of Prospectus
A combined circular and prospectus setting out the full details of the Capital Raise and related party transaction and a notice of the General Meeting (the "Prospectus") is expected to be published later today and will, following publication, be made available, subject to certain exceptions, on the Company's website, www.petrofac.com.
Any capitalised terms used but not otherwise defined in this announcement have the meaning given to them in the Prospectus.
The Capital Raise has been fully underwritten by the Joint Bookrunners, subject to the conditions set out in the Sponsor and Placing Agreement.
Ends
For further information contact:
Petrofac Limited
+44 (0) 207 811 4900
Jonathan Yarr, Head of Investor Relations
jonathan.yarr@petrofac.com
Alison Flynn, Group Director of Communications and Sustainability
alison.flynn@petrofac.com
The person responsible for arranging the release of this announcement on behalf of Petrofac is Alison Broughton, Company Secretary.
Tulchan Communications Group
+44 (0) 207 353 4200
petrofac@tulchangroup.com
Martin Robinson
petrofac@tulchangroup.com
Goldman Sachs
+44 (0) 207 774 1000
Bertie Whitehead
Chris Pilot
Tom Hartley
J.P. Morgan
+44 (0)20 7742 4000
Edmund Byers
Barry Weir
Will Holyoak
Indicative abridged timetable
Record Date for entitlements under the Open Offer 6.00 p.m. on 25
October 2021
Announcement of the results of the Firm Placing and Placing 26 October 2021
Latest time and date for receipt of completed Application Forms and payment in full under the Open
Offer or settlement of relevant CREST instructions (as appropriate) 11.00 a.m. on 11
November 2021
General Meeting 10.00 a.m. on 12
November 2021
Announcement of the results of the General Meeting and Capital Raise 12 November 2021
Admission and commencement of dealings in respect of New Shares 15 November 2021
Capital Raise statistics
Number of Shares in issue on 25 October 2021
345,912,747
Number of Firm Placing Shares to be issued by the Company pursuant to the Firm Placing
87,119,226
Number of Open Offer Shares to be issued by the Company pursuant to the Placing and Open
Offer 86,478,186
Number of Subscription Shares to be issued by the Company pursuant to the Director
Subscriptions 308,673
Aggregate number of New Shares to be issued by the Company pursuant to the Capital Raise 173,906,085
and the Director Subscriptions
Enlarged Share Capital immediately following completion of the Capital Raise and the
Director Subscriptions 519,818,832
New Shares as a percentage of Enlarged Share Capital immediately following completion of
the Capital Raise and the Director Subscriptions 33.5%
1 New Shares for every 4
Open Offer Entitlement existing shares
Issue Price
GBP1.15 (USUSD1.58)
Discount of the Issue Price to the Closing Price of GBP1.58 (USUSD2.18) per Share on the
Reference Date 27.2%
Estimated fees, costs and expenses in connection with the Capital Raise
USUSD16 million
Estimated net proceeds of the Capital Raise receivable by the Company USUSD259 million
NOTES TO EDITORS
Petrofac
Petrofac is a leading international service provider to the energy industry, with a diverse client portfolio including many of the world's leading energy companies.
Petrofac designs, builds, manages and maintains oil, gas, refining, petrochemicals and renewable energy infrastructure. Our purpose is to enable our clients to meet the world's evolving energy needs. Our four values - driven, agile, respectful and open - are at the heart of everything we do.
Petrofac's core markets are in the Middle East and North Africa (MENA) region and the UK North Sea, where we have built a long and successful track record of safe, reliable and innovative execution, underpinned by a cost effective and local delivery model with a strong focus on in-country value. We operate in several other significant markets, including India, South East Asia and the United States. We have approximately 8,500 employees based across 31 offices globally.
Petrofac is quoted on the London Stock Exchange (symbol: PFC).
For additional information, please refer to the Petrofac website at www.petrofac.com
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ISIN: GB00B0H2K534 Category Code: IOE TIDM: PFC LEI Code: 2138004624W8CKCSJ177 OAM Categories: 2.2. Inside information Sequence No.: 125164 EQS News ID: 1243445 End of Announcement EQS News Service =------------------------------------------------------------------------------------
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(END) Dow Jones Newswires
October 26, 2021 02:27 ET (06:27 GMT)
