Energy services group Petrofac is embarking on talks on a new refinancing package or a possible sale after its holding company was put into administration.
Petrofac, whose UK headquarters is in Aberdeen, has 8,000 employees worldwide, including 2,000 in the UK, and said it will continue to trade while it considers options with its creditors.
The decision follows the cancellation of a multi-billion pound contract by TenneT, announced last Thursday, which undermined Petrofac’s restructuring plan.
In a statement this morning, it said: “Having carefully assessed its options, and the impact of TenneT’s decision to terminate Petrofac’s scope of work on the 2GW programme in the Netherlands, the directors of Petrofac Limited (the Group’s ultimate holding company) have applied to the High Court of England and Wales to appoint administrators to Petrofac Limited.”
This is a targeted administration of the group’s ultimate holding company only.
It added: “The group’s operations will continue to trade, and options for alternative restructuring and M&A solutions are being actively explored with its key creditors, including the ad hoc group of noteholders, who are supporting the fgroup with continued forbearance arrangements whilst alternative options are explored.
“The group also retains the support of its RCF and term loan lenders who continue to extend maturities on a rolling basis.
“When appointed, administrators will work alongside executive management to preserve value, operational capability and ongoing delivery across the Group’s operating and trading entities.”
TenneT, which operates the electricity grid for the Netherlands and much of Germany, terminated a contract to build offshore platforms and onshore converter stations for six offshore wind farms.
The contract was awarded jointly to Petrofac and Hitachi in 2023 with a value of about €13 billion thought to be split fairly evenly between the two companies. At the time Petrofac said the agreement was “the largest in Petrofac’s history”.
The decision to cancel comes after heavily-indebted Petrofac had made progress on its restructuring which has taken more than a year to work out.
Shareholders would have been wiped out through a debt-for-equity swap but it would have saved the company.
Petrofac was listed in London in 2005 and grew to be a £6 billion company and a FTSE 100 constituent at its peak in 2012, before being hit by successive oil price crashes and a Serious Fraud Office inquiry. The fraud investigation deterred would-be customers and culminated in a conviction for failing to prevent bribery and the payment of $104 million in penalties in 2021.
The company was also hit by construction delays caused by the pandemic and as cashflow worsened it was unable to pay interest on its debt.
Its market valuation dropped to just over £20 million by May this year when its shares were suspended as it was unable to publish accounts pending the restructuring.
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