(Bloomberg) — Petrofac Ltd.’s bonds plummeted after the oil-services provider said it was considering a sale of assets to raise cash ahead of bank loans becoming due next year.
The London-based company, which has been struggling with loss-making legacy contracts, is in talks with parties to take a non-controlling stake in a portion of its business portfolio, Petrofac said in a statement Monday.
Petrofac and its advisers have held talks with a US special situations fund about a possible deal, according to a person familiar with the matter, who asked not to be identified because the details are private. The completion of a deal might need bondholders’ consent for a waiver on certain contract clauses, said the person.
A spokesperson for Petrofac declined to comment beyond the statement.
Petrofac’s $600 million of notes due November 2026 lost 11.5 cents to below 39 at 12:32 p.m. in London, according to CBBT data compiled by Bloomberg. Meanwhile, the shares rallied as much as 37% as a possible asset sale would help solve the company’s short-term cash-flow pressures and ensure business continuity, raising the group’s market valuation to £108 million ($137 million).
Petrofac said it was making progress with other efforts to boost its liquidity, including the collection of receipts on ongoing and new contracts. Still, delays in the receipt of advance payments mean that the company doesn’t expect to meet its full-year cash-flow target.
The group has a $162 million revolving credit facility and two $45 million term loans coming due next October, according to results published in August. It had $253 million of available liquidity, of which $136 million was restricted in specific geographies or in joint ventures as of June 30.
Petrofac will consider other options to boost its liquidity in the short-term if the asset-sale process fail, with a debt restructuring as the worst-case scenario, said two people familiar with the matter.
While the company has been struggling to curtail losses on older projects, it has been able to grow its pipeline of projects, which stood at $6.6 billion as of June 30, almost double the level of six months before.
It also announced that Aidan de Brunner has joined the company as a non-executive director.
(Updates with bond, share move in fifth paragraph. A previous version of the story corrected the maturity date of the bonds.)
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