Petrofac sells off deep-water project to pay down debt

Petrofac, which said it would use proceeds from the sale to reduce gross debt, had taken an impairment charge of $176m in its results for the year to March after deciding to exit the deep-water market.

While the gross consideration for the deal is $190m, plus a 10% interest in a new special purpose vehicle set up to own the vessel once commissioned, offsetting the total price is $23m owed under a previous hull and marine contract with ZPMC.

The remaining $167m net cash consideration will be paid in stages, with $92m due within 20 business days, another $70m staged as assets are physically transferred between mid-2018 to early 2019, and a final amount of $5m upon commissioning of the vessel.

Petrofac said it will provide technical support for the construction of the vessel, which is expected to complete in 2022, though it will not contribute to the cost of construction, commissioning or testing of the vessel.

Chief executive Ayman Asfari said: "This agreement materially completes our disposal of the project, in line with our stated intention to exit the deep-water market. It is a further positive step in the execution of our stated strategy to focus on our core strengths, deliver organic growth and reduce capital intensity."

Asfari resumed full duties in March after being placed under restrictions by the FTSE 250 company in May last year after the UK's Serious Fraud Office (SFO) started a probe into Petrofac as part of an inquiry into Monaco-based Unaoil over suspected bribery, corruption and money laundering.