Petrofac Limited's (LSE:PFC) rollercoaster year saw the shares rally as they returned from suspension after it published its accounts for 2023.
Net debt at the end of December was confirmed at US$583 million after losses for the year of US$506 million on revenues down slightly at US$2.49 billion.
The accounts came with a going concern warning highlighting that the oil and gas site fabricator is in a fragile financial situation.
Comprehensive refinancing is required to strengthen its balance sheet, improve liquidity and secure payment guarantees on its massive order book, the accounts said.
Petrofac added it is in default of interest under the terms of its senior secured notes of US$29 million on its due date of 15 May 2024.
The grace period for this payment expires on 14 June, after which time, if not remedied, a sufficiently large group of noteholders, ie above 25%, could initiate an enforcement action.
An ad hoc group of noteholders representing approximately 41% of the outstanding senior secured notes has entered into a forbearance agreement with the company, agreeing not to take enforcement action in respect of the non-payment of the coupon until at least 30 June.
“Securing approximately US$400 million of performance guarantees with limited collateral requirements is critical to the Financial Restructure. Initial exploratory discussions with potential providers were initiated in early 2024”, said the statement.
Contingency plans are being drawn up in the event agreement is not reached, which include changes to the group structure “to create a single point of enforcement”.
In addition, work has been required to evaluate which parts of Petrofac, if any, could be separated and continue to trade independently.
Enforcement action by creditors on overdue payments or obligations, or delays in operational cash receipts may cause further demands on liquidity, which if sufficiently great could result in a default on the debt facilities if remedial action is not taken.
“Notwithstanding these critical risks, the group’s projections show that it will be able to maintain liquidity at or above its covenant level until at least the end of September 2024 through continued working capital management,” said Petrofac.
Shares rose 52% to 16p upon readmission.