Petrofac facing possible shareholder claim over bribery allegations

Petrofac is facing a potential legal claim from a litigation-funding specialist based on allegations it misled investors over a bribery and money laundering scandal that has seen its shares lose half their value.

Bentham Ventures, the European firm backed by activist Elliott Management that was behind a recent £100m claim against Tesco, said on Tuesday that it was "contemplating funding legal proceedings" against Petrofac on behalf of shareholders who have bought share before 12 May, when the Serious Fraud Office confirmed it was investigating the oilfield services company.

The SFO confirmed on that date that it had launched an investigation into Petrofac, its subsidiaries and employees under suspicion of bribery, corruption and money laundering, all relating to the company's work with Monaco-based consultant Unaoil.

"Subject to legal advice, claims may be made pursuant to the Financial Services and Markets Act 2000 and/or in tort," Bentham said in a statement.

"The alleged grounds of the proposed litigation are expected to be that Petrofac issued false and misleading statements and/or failed to disclose material information regarding its business, its performance and prospects, and/or otherwise misled shareholders and/or concealed the conduct described below."

Last Thursday, Petrofac revealed the SFO had said that it "does not consider the company to have cooperated with it" and that the SFO would determine the outcome of its investigation and any prosecutions in due course.

Chief operating officer Marwan Chedid resigned after he was suspended by the company until further notice. Both he and chief executive Ayman Asfari had been arrested by the SFO and questioned under caution before being released without charge.

Bentham noted that following this news, Petrofac shares fell 30% to close at 389p on Friday, which means since 11 May the shares have fallen by more than 50%, "leaving shareholders with significant losses".

Petrofac said last week that it was committed to cooperating with the SFO's investigation and was devoting significant resources in engaging with the SFO, including the creation of a new committee made up of finance director Alastair Cochran, chairman Rijnhard van Tets and another independent non-executive with the purpose of working with the SFO on the probe.

It is planned that Asfari will continue in his role but will not be involved in any matters connected to the investigation and will have "no role or responsibilities for engaging with or liaising with agents and consultants".

Petrofac stressed that the actions taken last week "do not in any way seek to pre-judge the outcome of the SFO's investigation".

On Tuesday the company said its lenders have agreed to extend $1bn of its $1.2bn revolving credit facility from 2 June 2020 to 2 June 2021 following an extension request issued earlier this month.

Bentham Ventures, a specialist in providing backing for litigation and arbitration claims, is a joint venture set up by Australia's IMF Bentham Limited and Elliott Management.

Last June, IMF Bentham sold its 50% stake in BV to its joint-venture partner, the US hedge fund that has been behind a number of high-profile corporate disputes in recent months, including at BHP Billiton, WS Atkins, AkzoNobel and Alliance Trust.

In early May Elliott raised more than $5bn, with founder Paul Singer telling his investors the funds would be used toward the "possibly large opportunity set that could emerge when investor confidence is impaired, recent correlations and assumptions don’t work, and prices are changing rapidly".