Shares in oil and gas services firm Petrofac (LSE: PFC) are down by more than 15%, as I write, this morning, after the company announced a $275m fundraising. Petrofac’s share price is now unchanged over 12 months, but remains 85% lower than it was five years ago.
Petrofac stock soared at the end of September when the company announced it would pay a £77m penalty to settle a bribery investigation brought by the Serious Fraud Office (SFO).
Today, we’ve learned how the company plans to pay the fine. Petrofac will sell $275m of new shares at 115p per share — a discount of 27% to yesterday’s closing price. This cash will be used to pay the SFO penalty and clear the group’s existing debts. Today’s share price fall reflects the expected dilution from this discounted fundraising.
Rebuilding the business
Petrofac also released its half-year results today. These show revenue fell to $1,595m during the period, compared to $2,103m during H1 last year. Losses for the half-year rose to $86m, compared to $78m last year.
Like most rivals, the group’s performance was affected by last year’s oil market crash. But Petrofac has also faced difficulty winning new work in Middle Eastern countries, affected by the SFO bribery investigation.
Now that this issue has been resolved, chief executive Sami Iskander hopes to move forward. He plans to expand Petrofac’s business in Russia and has signed a new five-year deal with Russian oil and gas giant Gazprom.
Alongside this, Petrofac hopes to generate 20% of its revenue from renewable energy over the medium term.
