Petrofac Limited ( PFC) Petrofac Limited: Proposed Fully
Underwritten USUSD275 Million Firm Placing and Placing and Open
Offer 26-Oct-2021 / 07:26 GMT/BST Dissemination of a Regulatory
Announcement that contains inside information according to
REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. The
issuer is solely responsible for the content of this
announcement.
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Press Release
26 October 2021
NOT FOR RELEASE, PUBLICATION, TRANSMISSION, DISTRIBUTION OR
FORWARDING, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO
THE UNITED STATES, THE COMMONWEALTH OF AUSTRALIA, ITS TERRITORIES
AND POSSESSIONS, EACH PROVINCE AND TERRITORY OF CANADA, JAPAN,
SWITZERLAND AND THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER
JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO.
PLEASE SEE THE IMPORTANT INFORMATION AT THE OF THIS
ANNOUNCEMENT.
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND DOES NOT CONSTITUTE A
PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT. NOTHING HEREIN SHALL
BE CONSTRUED AS ANY OFFER, INVITATION OR RECOMMATION TO PURCHASE,
SELL OR SUBSCRIBE FOR ANY SECURITIES IN ANY JURISDICTION AND
NEITHER THE ISSUE OF INFORMATION NOR ANYTHING CONTAINED HEREIN
SHALL FORM THE BASIS OF OR BE RELIED UPON IN CONNECTION WITH, OR
ACT AS AN INDUCEMENT TO ENTER INTO, ANY INVESTMENT ACTIVITY.
ANY DECISION TO PURCHASE, SUBSCRIBE FOR, OTHERWISE ACQUIRE, SELL
OR OTHERWISE DISPOSE OF SECURITIES MENTIONED HEREIN MUST BE MADE
ONLY ON THE BASIS OF THE INFORMATION CONTAINED IN AND INCORPORATED
BY REFERENCE INTO THE PROSPECTUS.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/ 2014 (AS IT
FORMS PART OF THE LAWS OF THE UNITED KINGDOM BY VIRTUE OF THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMED FROM TIME TO TIME)
("UK MAR"), AND IS DISCLOSED IN ACCORDANCE WITH THE COMPANY'S
OBLIGATIONS UNDER ARTICLE 17 OF UK MAR.
Proposed Fully Underwritten USUSD275 Million Firm Placing and
Placing and Open Offer
Petrofac Limited (the "Company" or "Petrofac") today announces a
proposed issuance of equity, by way of a Firm Placing, Placing and
Open Offer (together, the "Capital Raise") in order to create a
long-term, sustainable capital structure.
The Company intends to raise gross proceeds of approximately
USUSD275 million (GBP200 million), through the issuance of, in
aggregate, up to 173,597,412 ordinary shares in the capital of the
Company (the "New Shares"), at an issue price of 115 pence per New
Share (the "Issue Price"). The Issue Price represents a discount of
27.2 percent to the closing share price of 158 pence on 25 October
2021.
Key Highlights
-- The USUSD275 million Capital Raise is part of a wider
refinancing plan (the "Refinancing Plan") announcedtoday,
comprising:? USUSD500 million bridge financing facility expected to
be replaced or refinanced by way of a publicbond issuance, expected
to be launched later today; ? USUSD180 million new revolving credit
facility; ? AEDUSD185 million (USUSD50 million) new bilaterial
facility; and ? an amendment of a USUSD50 million existing
bilateral term loan facility.
-- Proceeds from the Capital Raise will be used, alongside the
Refinancing Plan and available cash reservesto:? Pay, in January
and February 2022, the USUSD106 million (GBP77 million) penalty
imposed in relation tothe SFO investigation; and ? Repay existing
indebtedness.
-- These actions will extend Petrofac's debt maturities and
strengthen the Company's platform to execute itsstrategy.
-- The Capital Raise will be effected by way of a Firm Placing
of USUSD138.0 million (GBP100.2 million) and aPlacing and Open
Offer of USUSD137.0 million (GBP99.4 million).
-- Ayman Asfari has irrevocably committed to invest at least
USUSD38 million in the Capital Raise and to votein favour of the
corresponding resolutions at the General Meeting.
-- All directors in addition to Mr Asfari have committed to
invest in the Company, in connection with theCapital Raise at the
Issue Price.
Petrofac Chairman René Médori said: "Support from all our
shareholders and debt providers in the refinancing plan will
provide the company with a stable platform from which to grow and
look to the future with confidence. I welcome the continuing
support of our largest shareholder and fellow Board member Ayman
Asfari, as Petrofac moves on to the next chapter of its
history."
Sami Iskander, Group Chief Executive of Petrofac, said:
"Petrofac has a tremendous opportunity over the coming years to
grow and re-establish itself as one of the world's leading
providers of critical services to the energy industry. Following a
quieter period during the pandemic, we see activity in our markets
increasing significantly at a time when the full potential of our
business has been unlocked - in recent years we have refocused on
compliance, rebased our cost competitiveness, and now we are
re-energised under a new team and a new strategy. The completion of
the financing will cement a fantastic platform from which I am
confident that we will deliver significant shareholder value over
the coming years."
Ayman Asfari said: "I am pleased to support today's fund raise
which, after more than four difficult years, puts the company
squarely back on the path to recovery. I look forward to Sami and
his leadership team restoring Petrofac to its greatest
potential."
The Firm Placing and Placing are being conducted by way of an
accelerated bookbuild process (the "Bookbuild"), which will be
launched immediately following this announcement (the
"Announcement") and is subject to the terms and conditions set out
in the appendix to this Announcement (which forms part of this
Announcement) (the "Appendix").
Goldman Sachs International ("Goldman Sachs") and J.P. Morgan
Securities plc ("J.P. Morgan") are each acting as Joint Bookrunner,
Joint Underwriter and Joint Global Coordinator (together the "Joint
Bookrunners") to Petrofac in connection with the Capital Raise.
J.P. Morgan is acting as Sole Sponsor to Petrofac in connection
with the Capital Raise.
Background to and reasons for the Capital Raise
Petrofac is a leading provider of services to the global energy
industry, with a 40-year track record of designing, building,
managing, and maintaining energy infrastructure. The Group has
particular expertise in engineering, procurement and construction
of major facilities for the oil & gas and renewables sectors,
in addition to a strong operations and maintenance focused business
operating in the UK North Sea and internationally.
In May 2017 the Serious Fraud Office ("SFO") announced an
investigation into Petrofac. The investigation concluded on 4
October 2021, when Southwark Crown Court imposed a penalty of GBP77
million in relation to seven historic offences of failing to
prevent former Petrofac employees from offering or making payments
to agents in relation to projects awarded between 2012 and 2015,
contrary to Section 7 of the UK Bribery Act 2010. All employees
involved in the charges have left the business and the Court and
the SFO acknowledged Petrofac's corporate reform through its
transformation of the Company's leadership, personnel, compliance
and assurance processes.
Under new leadership, Petrofac has continued to prioritise
ethical business conduct and a comprehensive governance regime.
Following his appointment as Chief Executive on 1 January 2020,
Sami Iskander developed a new strategy based on best-in-class
delivery, returning the Company to growth and generating superior
returns. This strategy was communicated on 20 April 2021 at
Petrofac's full year results, and encompassed the Company's plans
for growth in its traditional core oil & gas markets alongside
an accelerated focus on new energies, particularly in those
segments aligned to Petrofac's core capabilities, in offshore wind,
carbon capture and storage, waste-to fuels/energy and hydrogen.
The resolution of the SFO investigation is expected to unlock
significant opportunities for Petrofac. The Company has identified
an annual addressable market growing to USUSD105 billion by 2025
with a bidding pipeline of USUSD46 billion of opportunities
scheduled for award by the end of 2022, including USUSD7 billion of
opportunities in new energies. Contract awards are expected to
accelerate in 2022, following a period of underinvestment by the
industry during the COVID-19 pandemic and supported by a stronger
commodity price environment.
The Directors believe Petrofac's refreshed leadership, improved
systems and clear strategy leave it well positioned to pursue
material opportunities in both core markets and new energies,
positioning the group to deliver growth and superior returns.
Petrofac's strategy aims to deliver revenues of USUSD4-5 billion
(with more than 20% from new energies), consistent premium margins
and a strong balance sheet with a net cash position over the medium
term. This strategy is expected to deliver significant shareholder
value creation.
The Refinancing Plan will create a long-term, sustainable
capital structure for the Company with appropriate leverage and a
maturity profile that supports its strategic plan.
Comprehensive Refinancing Plan To Deliver The Company's
Strategy
In connection with the Capital Raise, the Company is
implementing a comprehensive Refinancing Plan to create a
sustainable long-term foundation for the Company to execute its
strategy from. In addition to the Capital Raise, the Refinancing
Plan comprises: (i) a USUSD500 million bridge financing facility
which the Company expects to replace or refinance by way of public
bond issuance, (ii) a USUSD180 million new revolving credit
facility, (iii) a AEDUSD185 million (USUSD50 million) new
bilaterial facility, as well as (iv) amendment of an existing
USUSD50 million bilateral term loan facility.
The Company intends to use the proceeds of the Capital Raise, in
combination with the proceeds from the bridge facility (or the
public bonds which replace or refinance it), the new bilateral
facility and available cash reserves in order to pay, in January
and February 2022, the GBP77 million penalty imposed by the
Southwark Crown Court in relation to the SFO Investigation and to
repay indebtedness under its existing revolving credit facility
(USUSD546 million), an existing bilateral term loan (USUSD90
million), and its commercial paper issued under the CCFF (GBP300
million). Had the Capital Raise taken place as at the last balance
sheet date, being 30 June 2021, adjusted for the draw down on the
revolving credit facility which increased by USUSD196 million
between June 2021 and September 2021, the effect on the balance
sheet would have been to decrease Petrofac's pro forma net debt to
USUSD172 million. In the same period cash increased by USUSD3
million, however cash increase is not included in the pro forma net
debt.
The Refinancing Plan aims to deliver the Company's key
objectives of:
-- reducing indebtedness;
-- diversifying the Company's sources of capital by accessing
the debt capital markets; and
-- extending the maturity profile of the Petrofac's financing
arrangements, providing the Company withlong-term certainty,
flexibility, balance sheet strength, improved liquidity, and
ultimately an appropriate capitalstructure to deliver its
strategy.
The Directors believe that successful delivery of the Company's
strategy, together with the implementation of the Refinancing Plan,
will enable Petrofac to grow its businesses and generate increased
surplus cash flow with a view to further deleveraging the Company,
while providing a platform for the Company to resume dividend
payments in the future. The Petrofac Board, having carefully
considered the available alternatives, believes that the
Refinancing Plan is the best solution available to support delivery
of the Company's strategy.
Highlights of the Capital Raise
The Company proposes to raise aggregate gross proceeds of
approximately USUSD275 million through the issuance of, in
aggregate, 173,597,412 New Shares, at the Issue Price
comprising:
-- 87,119,226 New Shares through a Firm Placing, raising gross
proceeds of approximately USUSD138.0 million atthe Issue Price (the
"Firm Placing Shares"). The Firm Placing Shares are not subject to
clawback and are not partof the placing and open offer; and
-- Up to 86,478,186 New Shares through a Placing and an Open
Offer, raising gross proceeds of approximatelyUSUSD137.0 million at
the Issue Price ("Open Offer Shares").
Under the Open Offer, Qualifying Shareholders will have an
entitlement of one New Shares for every four existing ordinary
shares held.
The Firm Placing and Placing are fully underwritten and are
being conducted by way of an accelerated bookbuild process, which
will be launched immediately following this Announcement and is
subject to the terms and conditions set out in the Terms and
Conditions to this Announcement.
The Capital Raise is conditional upon, amongst other things,
shareholder approval for the issue of New Shares.
Shareholders who do not acquire New Shares in the Open Offer
will experience dilution in their ownership of approximately 33.5
percent and shareholders who take up their Open Offer Entitlement
in full will experience a dilution of approximately 16.8 percent as
a result of the Capital Raise and Director Subscriptions.
Director Commitments
Ayman Asfari, Non-Executive Director, and family hold in
aggregate approximately 19% of the shares in the Company. Mr Asfari
and family have provided an irrevocable commitment to invest at
least USUSD38 million into the Capital Raise, which they intend to
achieve through participation in both the Firm Placing and the Open
Offer. Mr Asfari and family's ultimate participation may increase
from this level but will not exceed the pro-rata entitlement
related to their aggregate shareholding
Ayman Asfari and family's participation in the Capital Raise is
a related party transaction and is of sufficient size to require
independent shareholder approval.
In addition, all directors other than Mr Asfari, have committed
to invest in the Company, in connection with the Capital Raise at
the Issue Price, pursuant to a direct subscription with the Company
for the purchase of additional shares (the "Director
Subscriptions").
Mr Sami Iskander, who does not currently hold any shares in the
Company following his appointment as CEO earlier in the year, has
committed to subscribe for shares at the Issue Price for an
aggregate price of GBP250,000.
All other directors have committed to subscribe for shares at
the Issue price, at a minimum, pro-rata to their shareholdings
acquired by virtue of their position as directors or as employees
of the Company. In aggregate, 308,673 shares are expected to be
issued by the Company to the directors.
Each director is a related party of the Company. However, due to
the size of the individual subscription relative to the Company's
market capitalisation, the Director Subscriptions are exempt from
the rules regarding related party transactions.
Publication of Prospectus
A combined circular and prospectus setting out the full details
of the Capital Raise and related party transaction and a notice of
the General Meeting (the "Prospectus") is expected to be published
later today and will, following publication, be made available,
subject to certain exceptions, on the Company's website,
www.petrofac.com.
Any capitalised terms used but not otherwise defined in this
announcement have the meaning given to them in the Prospectus.
The Capital Raise has been fully underwritten by the Joint
Bookrunners, subject to the conditions set out in the Sponsor and
Placing Agreement.
Ends
For further information contact:
Petrofac Limited
+44 (0) 207 811 4900
Jonathan Yarr, Head of Investor Relations
jonathan.yarr@petrofac.com
Alison Flynn, Group Director of Communications and
Sustainability
alison.flynn@petrofac.com
The person responsible for arranging the release of this
announcement on behalf of Petrofac is Alison Broughton, Company
Secretary.
Tulchan Communications Group
+44 (0) 207 353 4200
petrofac@tulchangroup.com
Martin Robinson
petrofac@tulchangroup.com
Goldman Sachs
+44 (0) 207 774 1000
Bertie Whitehead
Chris Pilot
Tom Hartley
J.P. Morgan
+44 (0)20 7742 4000
Edmund Byers
Barry Weir
Will Holyoak
Indicative abridged timetable
Record Date for entitlements under the Open Offer 6.00 p.m. on 25
October 2021
Announcement of the results of the Firm Placing and Placing 26 October 2021
Latest time and date for receipt of completed Application Forms and payment in full under the Open
Offer or settlement of relevant CREST instructions (as appropriate) 11.00 a.m. on 11
November 2021
General Meeting 10.00 a.m. on 12
November 2021
Announcement of the results of the General Meeting and Capital Raise 12 November 2021
Admission and commencement of dealings in respect of New Shares 15 November 2021
Capital Raise statistics
Number of Shares in issue on 25 October 2021
345,912,747
Number of Firm Placing Shares to be issued by the Company pursuant to the Firm Placing
87,119,226
Number of Open Offer Shares to be issued by the Company pursuant to the Placing and Open
Offer 86,478,186
Number of Subscription Shares to be issued by the Company pursuant to the Director
Subscriptions 308,673
Aggregate number of New Shares to be issued by the Company pursuant to the Capital Raise 173,906,085
and the Director Subscriptions
Enlarged Share Capital immediately following completion of the Capital Raise and the
Director Subscriptions 519,818,832
New Shares as a percentage of Enlarged Share Capital immediately following completion of
the Capital Raise and the Director Subscriptions 33.5%
1 New Shares for every 4
Open Offer Entitlement existing shares
Issue Price
GBP1.15 (USUSD1.58)
Discount of the Issue Price to the Closing Price of GBP1.58 (USUSD2.18) per Share on the
Reference Date 27.2%
Estimated fees, costs and expenses in connection with the Capital Raise
USUSD16 million
Estimated net proceeds of the Capital Raise receivable by the Company USUSD259 million
NOTES TO EDITORS
Petrofac
Petrofac is a leading international service provider to the
energy industry, with a diverse client portfolio including many of
the world's leading energy companies.
Petrofac designs, builds, manages and maintains oil, gas,
refining, petrochemicals and renewable energy infrastructure. Our
purpose is to enable our clients to meet the world's evolving
energy needs. Our four values - driven, agile, respectful and open
- are at the heart of everything we do.
Petrofac's core markets are in the Middle East and North Africa
(MENA) region and the UK North Sea, where we have built a long and
successful track record of safe, reliable and innovative execution,
underpinned by a cost effective and local delivery model with a
strong focus on in-country value. We operate in several other
significant markets, including India, South East Asia and the
United States. We have approximately 8,500 employees based across
31 offices globally.
Petrofac is quoted on the London Stock Exchange (symbol:
PFC).
For additional information, please refer to the Petrofac website
at www.petrofac.com
IMPORTANT INFORMATION
This announcement (the "Announcement") does not constitute an
offer to sell or a solicitation of an offer to purchase any
securities in any jurisdiction.
Any offer to acquire the Company's securities pursuant to the
proposed Capital Raise referred to in these materials will be made,
and any investor should make his, her or its investment, solely on
the basis of information that will be contained in the Prospectus
to be made generally available in the United Kingdom in connection
with such Capital Raise. When made generally available, copies of
the Prospectus may be obtained at no cost from the Company or
through the website of the Company.
This Announcement and the information contained in it is not for
publication, release, transmission, distribution or forwarding, in
whole or in part, directly or indirectly, in or into the United
States, Commonwealth of Australia, its territories and possessions,
each province and territory of Canada, Japan, Switzerland and the
Republic of South Africa or any other jurisdiction in which it
would be unlawful to do so (together, the "Excluded Territories").
This Announcement is for information purposes only and does not
constitute an offer to sell or issue or the solicitation of an
offer to buy, acquire or subscribe for shares in any of the
Excluded Territories. This Announcement has not been approved by
the London Stock Exchange plc (the "London Stock Exchange"). Any
failure to comply with these restrictions may constitute a
violation of the securities laws of such jurisdictions.
The securities mentioned herein (the "Securities") have not been
and will not be registered under the U.S. Securities Act of 1933,
as amended (the "Securities Act") or under the applicable
securities laws of any state or other jurisdiction of the United
States. The Securities may not be offered, sold, pledged, taken up,
exercised, resold, renounced, transferred or delivered, directly or
indirectly, in the United States absent registration under the
Securities Act, except pursuant to an applicable exemption from, or
in a transaction not subject to, the registration requirements of
the Securities Act and in compliance with any applicable securities
laws of any state or other jurisdiction of the United States. There
will be no public offering of the Securities in the United States.
Subject to certain limited exceptions, Application Forms have not
been, and will not be, sent to, and Open Offer Entitlements have
not been, and will not be, credited to the CREST account of, any
Qualifying Shareholder with a registered address in the United
States. None of the Securities, the Application Forms, this
announcement or any other document connected with the Capital Raise
has been or will be approved or disapproved by the U.S. Securities
and Exchange Commission, any state securities commission in the
United States, or any other U.S. regulatory authority, nor have any
of the foregoing authorities passed upon or endorsed the merits of
the offering of the Securities or the accuracy or adequacy of any
of the documents or other information related thereto. Any
representation to the contrary is a criminal offence in the United
States.
There will be no public offering of securities in the Excluded
Territories, which includes any other jurisdiction in which such
offer, solicitation or sale would be unlawful prior to
registration, exemption from registration or qualification under
the securities laws of such jurisdiction.
This Announcement has been issued by, and is the sole
responsibility of, the Company. No representation or warranty,
express or implied, is or will be made as to, or in relation to,
and no responsibility or liability is or will be accepted by J.P.
Morgan Securities plc (which conducts its UK investment banking
activities under the marketing name, J.P. Morgan Cazenove) ("J.P.
Morgan") or Goldman Sachs International ("Goldman Sachs"), or by
any of their respective affiliates or agents as to or in relation
to, the accuracy or completeness of this Announcement or any other
written or oral information made available to or publicly available
to any interested party or its advisers, and any liability
therefore is expressly disclaimed.
J.P. Morgan and Goldman Sachs are each authorised by the
Prudential Regulation Authority and regulated in the United Kingdom
by the Financial Conduct Authority and the Prudential Regulation
Authority. Each of J.P. Morgan and Goldman Sachs (together, the
"Joint Bookrunners") is acting solely for the Company and no one
else in connection with the Capital Raise or any other matter
referred to in this Announcement and will not be responsible to
anyone other than the Company for providing the protections
afforded to their respective clients nor for providing advice in
relation to the Capital Raise and/or any other matter referred to
in this Announcement. Any prospective purchaser of the shares in
the Company is recommended to seek its own independent financial
advice.
Save for the responsibilities and liabilities, if any, which may
be imposed on each of J.P. Morgan and Goldman Sachs by FSMA or by
the regulatory regime established under FSMA, neither J.P. Morgan
nor Goldman Sachs nor any of their respective affiliates accepts
any duty, liability or responsibility whatsoever for the contents
of the information contained in this Announcement, including its
accuracy, completeness or verification, or for any other statement
made or purported to be made by or on behalf of J.P. Morgan or
Goldman Sachs or any of their respective affiliates in connection
with the Company, the Securities or the Capital Raise to any person
who is not their client in connection with this Announcement, any
statements contained herein or otherwise. J.P. Morgan, Goldman
Sachs and each of their affiliates accordingly disclaim, to the
fullest extent permitted by law, all and any responsibility and
liability whatsoever, whether direct or indirect, whether arising
in tort, contract, under statute or otherwise (save as referred to
above) in respect of the use of this Announcement or any statements
or other information contained in (or omitted from) this
Announcement. No representation or warranty, express or implied, in
relation to the contents of this Announcement is made or purported
to be made by J.P. Morgan, Goldman Sachs or any of their respective
affiliates as to the accuracy, completeness, sufficiency of the
information contained in this Announcement.
The distribution of this Announcement and/or the offering of the
Securities in certain jurisdictions may be restricted by law. No
action has been taken by the Company or J.P. Morgan or Goldman
Sachs or any of their respective affiliates that would permit an
offering of the Securities in any jurisdiction or result in the
possession or distribution of this Announcement or any other
offering or publicity material relating to Securities in any
jurisdiction where action for that purpose is required.
Persons distributing any part of this Announcement must satisfy
themselves that it is lawful to do so. Persons (including, without
limitation, nominees and trustees) who have a contractual or other
legal obligation to forward a copy of this Announcement should seek
appropriate advice before taking any such action. Persons into
whose possession this Announcement comes are required by the
Company, J.P. Morgan and Goldman Sachs to inform themselves about,
and to observe, such restrictions.
This Announcement contains (or may contain) certain
forward-looking statements with respect to certain of the Company's
current expectations and projections about future events. These
statements, which sometimes use words such as "aim", "anticipate",
"believe", "intend", "plan", "estimate", "expect" and words of
similar meaning, reflect the directors' beliefs and expectations
and involve a number of risks, uncertainties and assumptions which
may occur in the future, are beyond the Company's control and could
cause actual results and performance to differ materially from any
expected future results or performance expressed or implied by the
forward-looking statement. Statements contained in this
Announcement regarding past trends or activities should not be
taken as a representation that such trends or activities will
continue in the future. The information contained in this
Announcement is subject to change without notice and, except as
required by applicable law, the Company does not assume any
responsibility or obligation to update publicly or review any of
the forward-looking statements contained in it, nor do they intend
to. You should not place undue reliance on forward-looking
statements, which speak only as of the date of this Announcement.
No statement in this Announcement is or is intended to be a profit
forecast or profit estimate or to imply that the earnings of the
Company for the current or future financial years will necessarily
match or exceed the historical or published earnings of the
Company. As a result of these risks, uncertainties and assumptions,
the recipient should not place undue reliance on these
forward-looking statements as a prediction of actual results or
otherwise.
This Announcement does not identify or suggest, or purport to
identify or suggest, the risks (direct or indirect) that may be
associated with an investment in the Securities. Any investment
decision to buy Securities in the Capital Raise must be made solely
on the basis of publicly available information, which has not been
independently verified by J.P. Morgan or Goldman Sachs.
The information in this Announcement may not be forwarded or
distributed to any other person and may not be reproduced in any
manner whatsoever. Any forwarding, distribution, reproduction or
disclosure of this information in whole or in part is unauthorised.
Failure to comply with this directive may result in a violation of
the Securities Act or the applicable laws of other
jurisdictions.
This Announcement does not constitute a recommendation
concerning any investor's options with respect to the Capital
Raise. Any decision to participate in the Capital Raise must be
made solely on the basis of the Prospectus published by the
Company. The price and value of securities can go down as well as
up. Past performance is not a guide to future performance. The
contents of this Announcement are not to be construed as legal,
business, financial or tax advice. Each shareholder or prospective
investor should consult his, her or its own legal adviser, business
adviser, financial adviser or tax adviser for legal, financial,
business or tax advice. Neither the content of the Company's
website nor any website accessible by hyperlinks on the Company's
website is incorporated in, or forms part of, this
Announcement.
Information to Distributors
Solely for the purposes of the product governance requirements
contained within of Chapter 3 of the FCA Handbook Production
Intervention and Product Governance Sourcebook (the "UK Product
Governance Requirements"), and disclaiming all and any liability,
whether arising in tort, contract or otherwise, which any
"manufacturer" (for the purposes of the UK Product Governance
Requirements) may otherwise have with respect thereto, the New
Shares have been subject to a product approval process, which has
determined that such securities are: (i) compatible with an end
target market of investors who meet the criteria of retail
investors and investors who meet the criteria of professional
clients and eligible counterparties, each as defined in paragraph 3
of the FCA Handbook Conduct of Business Sourcebook; and (ii)
eligible for distribution through all distribution channels (the
"Target Market Assessment"). Notwithstanding the Target Market
Assessment, distributors (for the purposes of UK Product Governance
Requirements) should note that: (a) the price of the New Shares may
decline and investors could lose all or part of their investment;
(b) the New Shares offer no guaranteed income and no capital
protection; and (c) an investment in the New Shares is compatible
only with investors who do not need a guaranteed income or capital
protection, who (either alone or in conjunction with an appropriate
financial or other adviser) are capable of evaluating the merits
and risks of such an investment and who have sufficient resources
to be able to bear any losses that may result therefrom. The Target
Market Assessment is without prejudice to the requirements of any
contractual, legal or regulatory selling restrictions in relation
to the Capital Raise. Furthermore, it is noted that,
notwithstanding the Target Market Assessment, the Joint Bookrunners
will only procure investors who meet the criteria of professional
clients and eligible counterparties.
For the avoidance of doubt, the Target Market Assessment does
not constitute: (a) an assessment of suitability or appropriateness
for the purposes of Chapter 9A or 10A respectively of the FCA
Handbook Conduct of Business Sourcebook; or (b) a recommendation to
any investor or group of investors to invest in, or purchase, or
take any other action whatsoever with respect to the New
Shares.
Each distributor is responsible for undertaking its own target
market assessment in respect of the New Shares and determining
appropriate distribution channels.
APPIX I
DEFINITIONS
admission of the New Shares to (i) the Official List and (ii) trading on
Admission
the London Stock Exchange's main market for listed securities
the application form to be issued to Qualifying Non-CREST
Application Form
Shareholders (other than to certain Overseas Shareholders) for use in connection with the Open
Offer
the relevant system (as defined in the CREST Regulations) for the
paperless settlement of trades in listed securities in the United
CREST
Kingdom, of which Euroclear is the operator (as defined in the
CREST Regulations)
CREST Regulations the Uncertificated Securities Regulations 2001 (SI 2001/3755)
Firm Placing the firm placing of the Firm Placing Shares, as described in this announcement
General Meeting the general meeting of the Company to be held at 10.00 a.m. on 12 November 2021 at the offices
of Linklaters LLP at One Silk Street, London EC2Y 8HQ
Joint Bookrunners J.P. Morgan and Goldman Sachs
the invitation to Qualifying Shareholders to subscribe for the Open
Offer Shares at the Issue Price on the terms and subject to the
Open Offer conditions set out in this document (and, in the case of Qualifying
Non-CREST Shareholders only, the Application Form)
a Qualifying Shareholder's entitlement to subscribe for one Open
Open Offer Entitlement Offer Shares for every four Existing Shares held by them pursuant to
the Open Offer
Placing the conditional placing of the Open Offer Shares as described in this announcement
Qualifying Shareholders (other than in respect of treasury shares) on the register of members of the
Shareholders Company at the Record Date
Qualifying CREST Qualifying Shareholders holding Shares in uncertificated form
Shareholders
Qualifying Non-CREST Qualifying Shareholders holding Shares in certificated form
Shareholders
Sponsor and Placing has the meaning given to it in Appendix III to this announcement
Agreement
APIX II
LETTER FROM THE CHAIRMAN
Proposed Firm Placing and Placing and Open Offer 1.
Introduction
Petrofac has today announced a proposed capital raise by way of
a Firm Placing and Placing and Open Offer to raise gross proceeds
of approximately USUSD275 million (GBP200 million) as part of a
Refinancing Plan to extend its debt maturities and strengthen the
Group's platform to execute its strategy.
87,119,226 New Shares will be issued through the Firm Placing
and 86,478,186 New Shares will be issued through the Placing and
Open Offer on the basis of one New Share for every four Existing
Shares.
The Issue Price of GBP1.15 (USUSD1.58) per New Share represents
a 27.2% discount to the Closing Price of GBP1.58 (USUSD2.18) per
Existing Share on the Reference Date. The Issue Price (and the
discount) has been set by the Directors following their assessment
of the prevailing market conditions and anticipated demand for the
New Shares. The Board, having taken appropriate advice from its
advisers, believes that the Issue Price (including the discount) is
appropriate in the circumstances.
The Capital Raise has been fully underwritten by the Joint
Bookrunners, on the terms and subject to the conditions set out in
the Placing Agreement.
The purpose of this Announcement is to explain the background to
and reasons for the Capital Raise, to summarise the key terms and
conditions of the Firm Placing and Placing and Open Offer and to
explain why the Board considers the Capital Raise to be in the best
interests of the Group and Shareholders as a whole, and to seek
your approval of the Resolutions to be proposed at the General
Meeting.
The Capital Raise is conditional on, among other things, the
passing of the Resolutions by Shareholders at the General Meeting,
which is scheduled to take place at 10:00 a.m. on 12 November 2021.
The Board unanimously recommends that Shareholders vote in favour
of the Resolutions to be proposed at the General Meeting, as each
of the Directors intends to do in respect of their own beneficial
holding of Shares. 2. Background to and Rationale for the Capital
Raise 1. Background to the Capital Raise
Petrofac is a FTSE-listed leading international service provider
to the energy industry, with a diverse customer portfolio spanning
Europe, MENA and Asia. Petrofac provides a comprehensive suite of
services for energy infrastructure assets across the full asset
lifecycle from design and construction to management and
maintenance. Petrofac is also accelerating its focus on new
energies and is pursuing rapid growth in those segments where its
core capabilities and transferable skills can immediately create
value, namely offshore wind, carbon capture and storage,
waste-to-fuels/ energy and hydrogen.
Petrofac has a track record spanning more than 40 years. It has
delivered over 200 major projects, with 16 major projects currently
ongoing. It currently operates 31 offices in 29 countries, fields
8,499 employees, with procurement spend over USUSD1.3 billion in
2020. In 2020, Petrofac ranked as number 20 in Engineering
News-Record's list of top 250 international contractors worldwide,
and secured first place in Refining and Petrochemicals Middle East
magazine's Top 30 EPC Contractors listing.
Petrofac is led by a newly appointed CEO with more than 30
years' international experience in both oilfield services and
upstream exploration and production. He brings to Petrofac a set of
systems and practices derived from the largest and most successful
companies in the energy sector. He is supported by a new CFO with
almost a decade at Petrofac, spanning a number of roles including
most recently as Group Treasurer and Head of Tax, Insurance and
Risk.
Petrofac's new management team is driving a series of
initiatives to further embed the Group's culture and technical
performance. A new "One Petrofac" operating model is being deployed
globally to clearly define the Group's values, policies and
behaviours, so that customers worldwide experience consistent
delivery and service quality. The Group has also created a
collaborative technical organisation called "1tec", which brings
together its technical experts in a series of "Functions" such as
proposals, engineering, supply chain and quality assurance, to
ensure that best practices are developed and shared effectively
across the organisation and that Petrofac's teams across the globe
deliver world class performance in every location.
Petrofac targets a global energy market that is expected to
reach an annual spend of approximately USUSD850 billion by 2025,
based on the Group's market analysis. In aggregate, the addressable
market for Petrofac is expected to exceed USUSD100 billion by 2025
(excluding opportunities within the UAE, Saudi Arabia and Iraq,
which Petrofac expects to re-enter over time). An estimated USUSD70
billion within this addressable market is expected to be spent
annually by 2025 in Petrofac's core business segments, namely
upstream, refineries and petrochemicals, where Petrofac believes
that it has a compelling customer proposition and an enviable track
record. A further USUSD20 billion is expected to be spent in those
new energies markets where the Group is accelerating its efforts,
namely offshore wind, carbon capture and storage,
waste-to-fuels/energy and hydrogen by 2025. And finally, operating
expenditure for upstream and new energies infrastructure, where
Petrofac believes that it can deploy its operations and maintenance
capabilities, is expected to grow to USUSD15 billion per annum by
2025.
The Directors believe that Petrofac's recently refreshed
leadership and systems, and its clear strategy, leave it well
positioned to pursue material opportunities in both core markets
and new energies, positioning the group to deliver solid growth and
superior returns. The Group has secured revenue of approximately
USUSD1.5 billion for the six months ending 31 December 2021, which
comprises approximately USUSD1.0 billion from E&C and
approximately USUSD0.5 billion from EPS, and of approximately
USUSD1.6 billion for the year ending 31 December 2022, which
comprises approximately USUSD0.9 billion from E&C and
approximately USUSD0.7 billion from EPS. In the medium term,
execution of Petrofac's strategy aims to deliver revenues of
USUSD4-5 billion (with more than 20% from new energies),
consistently premium margins and a strong balance sheet with a net
cash position.
On 24 September 2021, the Company announced that it had entered
a plea agreement with the SFO. Pursuant to the plea agreement, the
Company entered guilty pleas to seven counts of historical offences
of failing to prevent bribery by former employees, contrary to
section 7(1) of the Bribery Act 2010. Taken together, these seven
counts involved five former Group employees. Under the terms of the
plea agreement, the Company pleaded to failure to prevent these
former employees from offering or making payments to agents who
intended to obtain or retain business and/or an advantage in the
conduct of busines, in relation to 10 projects (including variation
orders and extensions) in Iraq, Saudi Arabia and the UAE in the
period from 2011 to 2017. The Company and the SFO's representations
to the Court outlined instances of failure of the Company's
compliance systems and oversight structures during that period to
identify and prevent instances of bribery by employees of the
Group. In particular, attempts were made by these former employees
to conceal their misconduct. No members of the Company's current
Board of Directors were implicated in the plea agreement agreed
with the SFO. Since these events, the Company has engaged in an
extensive programme to enhance its corporate governance framework.
This includes both changes to executive management and the
departure of the relevant employees named in the pleas from the
Group, as well as the continued enhancement of the Group's
compliance systems and oversight structures to prevent these types
of behaviour in the future. The SFO and the Court have recognised
that the Group has undergone extensive corporate reform in recent
years and continues to put in place a robust compliance programme.
On 4 October 2021, Southwark Crown Court handed down a sentence
imposing a fine of GBP77 million on the Company (comprising a
confiscation order of GBP22.8 million payable by 3 January 2022, a
fine of GBP47.2 million payable by 14 February 2022 and an order to
reimburse SFO costs in the amount of GBP7 million also payable by
14 February 2022) (the "SFO Fine"). In determining the penalty, the
Court and the SFO acknowledged the Company's extensive corporate
reform through its transformation of its leadership, personnel,
compliance and assurance processes. In addition, the strengthening
of the Company's compliance programme, due diligence function and
ongoing, independent third-party scrutiny of compliance
arrangements was noted and it was acknowledged that serious
attempts have been made by the Company to improve its corporate
culture and address the issues.
The Directors are not aware of any further criminal
investigations or proceedings being taken, or planned to be taken,
against the Group in relation to these incidents. Subject to
payment of the penalty in accordance with the terms set out above,
the SFO Investigation as it relates to the Company and its
subsidiaries is now closed.
The SFO Investigation into past issues caused significant damage
to the Group, including to its order intake, financial position,
customer relationships and reputation. Although the Group has
engaged in an extensive programme of corporate reform since the
time of these events, and has in recent years taken a number of
steps to further bolster its compliance programme, the SFO
Investigation negatively affected a number of customer
relationships and trading activity. In 2019, customers in Iraq and
Saudi Arabia suspended Petrofac from bidding on new contracts,
while allowing the Group to execute pre-existing contracts,
followed by a UAE customer in 2020. Iraq, Saudi Arabia and the UAE
accounted for 27% of total revenue in the period 2015-2019, prior
to the first suspension, and revenue from these countries decreased
to 12% in 2020. Other existing and prospective customers sought
better terms during this time, when Petrofac's bargaining power was
constrained, and it became difficult to attract and retain key
personnel. In addition, the Group has incurred the SFO Fine in
respect of which it has recognised a USUSD106 million payable on
its balance sheet as at 30 June 2021. Each of these factors, along
with the allocation of significant resources, both internally as a
result of management time and externally through advisers, had a
substantial impact on the Group's revenue and profitability.
Furthermore, it became more challenging for the Group to secure
long-term financing.
These challenges were compounded in 2020 when the COVID-19
pandemic brought major disruption to the energy sector and a rapid
deterioration in market conditions which, for Petrofac, led to
project delays and increased costs. The sharp decline in oil prices
in 2020 put both national and international oil companies under
financial pressure, with many taking steps to reduce costs and
protect their balance sheets. This resulted in deferred capital
spending and a scarcity of new project awards. Petrofac also
experienced slower payments and a more challenging commercial
environment in which to settle contractual claims.
Resolution of the SFO Investigation removes many of the
uncertainties that have influenced order intake, financial
position, customer relationships and reputation, as well as
constraints that have limited Petrofac's ability to win work,
compete with peers, retain key talent and deliver its strategy, and
as a result is expected to instill confidence in existing and
potential customers in the Group's ability to undertake major
projects in the coming years. It also presents a critical
opportunity to re-engage with key customers in the Group's
traditional markets. Consequently, the Petrofac Board believes the
long-term fundamentals of the business are strong with its
addressable market expected to exceed USUSD100 billion by 2025.
Petrofac has outlined its strategy to provide best-in-class
delivery to customers through consistent execution, to return to
growth by targeting attractive opportunities in its core markets
and the very strong growth anticipated in new energies, and to
deliver superior returns with a balanced approach to risk,
generating premium margins and supported by a strong balance
sheet.
The Board believes that this strategy, as set out in detail
below, provides a credible and sustainable route to deliver
long-term value for shareholders and other stakeholders. However,
the terms of the SFO resolution including the payment of the
penalty, combined with the current level of indebtedness and the
terms and maturity profile of its existing financing arrangements,
materially constrain the Group's ability to implement its strategy.
The Petrofac Board believes that additional steps are required to
accelerate deleveraging of the Group's balance sheet and to
transition to a long-term, sustainable capital structure
appropriate to the size of the Group and its strategy.
Accordingly, the Petrofac Board has, following engagement with a
group of its core lending banks and other stakeholders, developed a
Refinancing Plan, as defined below, to strengthen its capital base
and financial position. The Refinancing Plan will deleverage the
Group's balance sheet, extend the maturity profile of the Group's
financing arrangements and strengthen the Group's capital
structure. This will increase the financial flexibility and
stability of the Group and improve the credit perception of
Petrofac with customers, partners and suppliers. The Petrofac Board
believes that this will, in turn, enable the Group to pursue its
strategy more effectively and enhance long-term shareholder value.
2. The Refinancing Plan
Petrofac's existing lending facilities comprise: (i) a
syndicated revolving credit facility of USUSD610 million maturing
on 2 June 2022 (the "Existing Revolving Credit Facility"); (ii) a
bilateral term loan of the equivalent of USUSD90 million, from Abu
Dhabi Commercial Bank (the "Existing ADCB Term Loan Facility"),
maturing on 1 April 2022; (iii) a bilateral term loan of USUSD50
million (the "Existing RAK Term Loan Facility"), from The National
Bank of Ras Al-Khaimah (P.S.C.) ("RAK Bank"), maturing on 31
October 2023; (iv) GBP300 million of commercial paper, issued under
the Covid Corporate Finance Facility (the "CCFF") due to be repaid
on 31 January 2022; and (v) an USUSD8 million overdraft facility
that is drawn and is to be repaid.
The "Refinancing Plan" includes the following components:
-- the raising of gross proceeds of USUSD275 million (GBP200
million) by way of the Firm Placing and Placing and Open Offer
(USUSD259 million after deduction of estimated expenses, including
underwriting commissions);
-- the establishment of a USUSD500 million bridge financing
facility, which matures on 26 October 2022, with an option (at the
Company's election, and without requiring the lenders' consent) to
extend the maturity by six months (the " Bridge Facility"), and
which is expected either to be: (a) drawn in full and subsequently
refinanced by way of a public bond issuance prior to its maturity;
or (b) replaced prior to being drawn down by way of a public bond
issuance, in either case following the closing of the Capital
Raise;
-- the establishment of an AED185 million (USUSD50 million) new
term loan facility with ADCB, maturing 24 months following its
utilisation date (the "New ADCB Facility");
-- the amendment of the USUSD50 million Existing RAK Term Loan
Facility (as amended, the "Amended RAK Facility", maturing 1
November 2023); and
-- the establishment of a USUSD180 million revolving credit
facility, maturing 26 October 2023 (the "New Revolving Credit
Facility").
The Company intends to use the proceeds of Firm Placing and
Placing and Open Offer, in combination with the proceeds from the
Bridge Facility, the New ADCB Facility and available cash reserves
in order to pay, in January and February 2022, the GBP77 million in
penalties and fees imposed by the Southwark Crown Court in relation
to the SFO Investigation and to repay indebtedness under its
existing revolving credit facility (USUSD546 million), its existing
term loan with ADCB (USUSD90 million), its commercial paper under
the CCFF (GBP300 million) and an existing overdraft facility
(USUSD8 million), as well as estimated fees and expenses in
connection with its refinancing plan (USUSD36 million).
Petrofac entered into the Bridge Facility, the New Revolving
Credit Facility, the New ADCB Facility and the Amended RAK Facility
on 26 October 2021. The effectiveness of the Refinancing Plan,
however, is contingent on completion of the Capital Raise, which is
conditional on the Resolutions having been passed by Shareholders
at the General Meeting. Assessment of the Refinancing Plan
The Refinancing Plan aims to deliver the Group's key objectives
of:
-- reducing indebtedness, taking into account the resolution of
the SFO resolution, including the payment of the SFO Fine;
-- diversifying the Group's sources of capital by accessing the
debt capital markets in order to replace the Bridge Facility or to
refinance borrowings under the Bridge Facility prior to its
maturity; and
-- extending the maturity profile of the Group's financing
arrangements, providing the Group with long-term certainty,
flexibility, balance sheet strength, improved liquidity, covenant
headroom and ultimately an appropriate capital structure to deliver
its strategy.
The Refinancing Plan will also facilitate, and allow the Group
to focus its efforts on, the implementation of its strategy. The
Directors believe that successful delivery of the Group's strategy,
together with the implementation of the Refinancing Plan, will
enable Petrofac to grow its businesses and generate increased
surplus cash flow with a view to further deleveraging the Group,
while providing a platform for the Group to resume dividend
payments in the future. The Petrofac Board, having carefully
considered the available alternatives, believes that the
Refinancing Plan is the optimal solution available to support
delivery of the Group's strategy, and has confidence in being able
to issue the proposed public bonds on market-competitive terms.
Petrofac closed 2020 with USUSD1.1 billion of liquidity and
ample covenant headroom. The Refinancing Plan provides sufficient
operating liquidity over the coming years based on Petrofac's
internal forecasts. Petrofac expects to continue to deliver and
transition to a net cash position in the medium term. 3. The
Group's Strategy and Key Strengths 1. Market Outlook
Global energy demand growth is underpinned by population growth,
with an increase of 2 billion people expected by 2050, together
with increasing levels of prosperity in emerging economies which
are urbanising quickly and improving their access to energy.
There are a range of different scenarios, considering the
aggregate views of the IEA, OPEC and other commentators, for future
energy demand depending on government policies, speed of recovery
from the COVID-19 pandemic and environmental targets. However, in
all scenarios, absolute energy demand is expected to increase in
the period to 2050. Renewables are expected to grow most rapidly,
but all forms of energy will be required for the foreseeable future
and oil and gas are expected to constitute a considerable
proportion of the total energy supply for the foreseeable future in
all scenarios.
Based on the Group's market analysis, it expects that worldwide
capital investment in all forms of energy will grow to
approximately USUSD850 billion by 2025. In aggregate, the
addressable market for Petrofac is expected to exceed USUSD100
billion by 2025 (excluding opportunities within the UAE, Saudi
Arabia and Iraq, which Petrofac expects to re-enter over time). In
the period up to 2025, Petrofac is focused on three compelling
addressable markets that align closely with its core capabilities
and track record. Firstly, capital expenditure on upstream,
refining and petrochemicals, where Petrofac has a compelling
customer proposition and a strong track record of project
execution, is expected to rise to approximately USUSD70 billion per
annum by 2025. The MENA region upstream capex forecast is expected
to grow at 10% CAGR 2021-2025 (Source: Rystad). Secondly,
opportunities within new energies (comprising offshore wind, carbon
capture and storage, waste-to-fuels/energy and hydrogen), where
Petrofac is accelerating its efforts, are expected to grow to
approximately USUSD20 billion per annum by 2025. Thirdly, operating
expenditure for upstream and new energies infrastructure, where
Petrofac believes that it can deploy its operations and maintenance
capabilities, is expected to grow to USUSD15 billion per annum by
2025.
Source: Group market analysis
Notes:
(1) Core (upstream and refinery) and adjacent (petrochemical) sectors excluding UAE, Saudi and Iraq.
(2) Top 5 countries by aggregate addressable market 2021-25 are Algeria, Oman, Kuwait, India and Russia.
(4) Opex for upstream and new energies. 2. Key Strengths 1. Leading international service provider and trusted partner to the energy industry withlong-standing customer relationships
Petrofac is a trusted partner to a diverse portfolio of
customers, providing services covering every stage of the project
lifecycle from conception to completion, and able to offer flexible
commercial models. The Group has operations in 29 countries with 16
major projects ongoing and 8,499 employees worldwide.
The Group has long and deep customer relationships with
international and national oil companies. Its E&C division has
a 40-year track record in designing and building major energy
infrastructure projects with over 200 major projects delivered. It
has a particularly strong presence in the MENA region where it has,
for example, built 70% of the gas infrastructure in Oman and built
infrastructure in Kuwait that supports 35% of the country's oil
production. These positions have supported revenues of USUSD25
billion in E&C MENA operations between 2014 and 2020.
Petrofac has a reputation for having an exceptional EPC
capability in the market. The Group's 40% market share in
operations and maintenance in the UK is a testament to its
market-leading capabilities and service offering. In 2020, Petrofac
secured first place in Refining and Petrochemicals Middle East
magazine's Top 30 EPC Contractors listing, which cited the Group's
operational delivery, its strong safety record and its
digitalisation programme. 2. Strategic positioning in attractive
core markets with addressable spend expected to rise by 40%by
2025
Petrofac has a leading presence in key regions, including MENA,
which has some of the lowest marginal costs of oil and gas
production in the world, as well as the UK North Sea, which
benefits from resilient spending throughout the cycle. The Group is
resilient to cyclical downturns in the oil and gas industry given
the breadth of its diversification and this will increase as it
builds expertise and expands into new energies. The Group is
well-positioned as the oil and gas sector emerges from the COVID-19
pandemic. Its core markets in MENA are likely to be the first to
recover and to remain the most resilient. Upstream capex in the
MENA region is expected to grow at 10% CAGR 2021-2025 (Source:
Rystad) providing long term tailwinds for the Group.
Petrofac has been successfully diversifying its bidding pipeline
into geographies beyond core markets, including India, South-East
Asia, the Commonwealth of Independent States, Europe and the United
States, where Petrofac has demonstrable track records. It has
addressable markets that are expected to grow to USUSD105 billion
per annum by 2025 (excluding opportunities within the UAE, Saudi
Arabia and Iraq, which Petrofac expects to re-enter over time),
including USUSD70 billion in core capital expenditure (comprising
upstream and refinery and adjacent (petrochemical) sectors),
USUSD20 billion in new energies and USUSD15 billion in operating
expenditure.
Petrofac has a Group pipeline of USUSD46 billion scheduled for
award to the industry by the end of 2022, which comprises USUSD32
billion in E&C and USUSD14 billion in EPS. The large
addressable market in 2022 supports Petrofac's recovery trend and
includes a fast-growing pipeline of new energies projects, which
currently comprises USUSD7 billion of opportunities in offshore
wind, carbon capture and storage, hydrogen and waste-to-value.
1. Opportunities scheduled for award to the industry by the end
of 2022. The Group bidding pipeline excludes opportunities in UAE,
Saudi Arabia and Iraq
2. New energy opportunities are contained within E&C and EPS
pipelines
3. For 8 months to December 2021
4. For 14 months to December 2022
In E&C, the USUSD32 billion pipeline is underpinned by its
core MENA addressable markets in Algeria, Kuwait and Oman, where it
has had a long-standing presence and its differentiated local
delivery model and strong in-country-value makes it particularly
competitive.
In growth geographies, such as India, it is currently executing
multiple EPC contracts and has in-country centres of excellence for
engineering. It has a successful track record of execution in
Russia and Kazakhstan and has recently secured its first project in
Libya, where there is significant growth potential.
The Group has already secured revenue of USUSD1.0 billion from
E&C for the six months ending 31 December 2021 and
approximately USUSD0.9 billion for the year ending 31 December
2022.
1. The bidding pipeline includes E&C opportunities scheduled
for award to the industry by end of 2022. Excludes opportunities in
UAE, Saudi Arabia and Iraq
2. Core E&C geographies comprise Algeria, Kuwait and
Oman
Furthermore, the Company is anticipating significant upside
potential upon return to markets in Saudi Arabia, Iraq and the
UAE.
The EPS business unit has demonstrated its resilience to the
downturn delivering a book-to-bill of 1.0x in 2020, one of the most
challenging years in the history of the industry, and is on course
to do the same in 2021.
The Group has already secured revenue of approximately USUSD0.5
billion from EPS for the six months ending 31 December 2021 and
approximately USUSD0.7 billion from EPS for the year ending 31
December 2022.
As discussed above, it has a diverse USUSD14 billion pipeline,
with over 50% of the opportunities outside its core market in the
UK. For the six months ended 30 June 2021, 50% of the revenue share
of the EPS business was from its core market in the UK with 50%
from non-UK EPS markets.
In addition, there has been a strong improvement in the Group's
track record of supporting new energy projects across a wide range
of different technologies where, within the EPS segment, activity
in new energy has increased significantly with 14 contracts secured
in 2021 to date compared with two contracts in 2020. Growth in new
energy contracts (growth shown for EPS segment) 3. Future-ready and
well positioned to leverage existing capabilities to deliver growth
within theenergy transition
The energy transition has been at the core of Petrofac's future
strategy in terms of expansion into new energies and building
capabilities, as well as subject matter expertise that enables the
transition of its customers. Petrofac is building expertise in
segments that offer attractive near to long-term growth prospects
and has already established a strong position in key high-growth
sectors such as offshore wind, carbon capture and storage, hydrogen
production, and waste-to-value.
Over USUSD3 billion of offshore wind opportunities are already
in the pipeline scheduled for award to the industry by the end of
2022, with a projected new energies addressable market of USUSD20
billion by 2025, based on the Group's market analysis.
1. Source: Wind Europe. 25GW installed capacity in 2020 growing
to 400GW in 2050
2. Carbonomics, Goldman Sachs
Petrofac has a 10-year track record in offshore wind and a
leading position in EPC for substations, with growing expertise in
emissions reduction, CCUS, blue and green hydrogen and
waste-to-value. The Company is able to deploy experienced resources
familiar with engineering, construction, operations and maintenance
across the full array of its target new energies markets.
Life-of-asset service offering, a technology-neutral approach and
flexible commercial models provide additional competitive
differentiation.
Strategic alliances formed with project developers and
technology providers across CCUS, hydrogen and waste-to-fuels
further boost capabilities and the depth of service offering. The
Group's new energies strategy is driven by a strong leadership team
with an exceptional track record in the energy services industry.
The leadership team is fully equipped to enable Petrofac to become
a leader in energy transition services across its targeted
high-growth sectors. 4. Strong competitive position with
sector-leading margins
Petrofac has a long track record of delivering differentiated
margins. The Group's strong local delivery capability de-risks
execution of contracts enabling it to provide best-in-class
execution. It is the only tier 1 EPC company with centres of
excellence for engineering in the Middle East.
Petrofac has a solid local identity in more than 25
nationalities globally. Its diversity offers a high level of
cultural alignment to its customers, which they value, and forges
stronger and enduring relationships.
Historically, the Company has delivered consistent premium
margins to clients through strong local delivery underpinned by
local procurement and working with local construction partners. In
2020, 53% of procurement spend was carried out locally and involved
85% of local subcontractors as construction partners.
1. For the financial year 2020
2. COE denotes centres of excellence
Over the last 10 years Petrofac's average E&C EBIT margin
has been 9% which was markedly higher than the sector peers.
Petrofac EBIT margin vs peers (2010-2020)¹
¹ Average EBIT margin 2010-2020. Comparison of E&C margins
with closest comparable European peers' E&C divisions
The Company's strategy is to enhance its best-in-class delivery
by simplifying the organisation and delivering to one global
Petrofac standard, ensuring predictable and consistent execution.
It has a highly cost-competitive structure underpinned by ongoing
cost-saving measures, and is further improving efficiency through
organisational simplification, investment in digitalisation and
increasing automation. 5. Committed to minimising environmental
impact of energy industry and driving greater diversity
Petrofac is committed to reducing the environmental impact of
operations targeting Net Zero Scope 1 and 2 emissions by 2030. The
Company is fully compliant with Task Force on Climate-Related
Disclosures ("TCFD") and has a Carbon Disclosure Project ("CDP")
rating of B. It is furthermore working to influence its supply
chain partners to set their own emission reduction targets.
At a divisional level, Petrofac is committed to achieving Net
Zero in its EPS business by 2025, while E&C and PM304 producing
asset in Malaysia will do so by 2030. Work is underway to assess
the Group's Scope 3 emissions baseline as it looks to decarbonise
its supply chain; and it will set emissions reductions targets
grounded in climate science through the Science Based Target
Initiative.
The Company has also demonstrated an increased focus on
diversity and inclusion, including through the setting of ambitious
new diversity targets, and the appointment of its first Global Head
of Diversity and Inclusion. The Company aims to expand diversity of
workforce with the objective of 30% of women in senior roles by
2030. As measured per the Hampton Alexander methodology, the Group
has successfully increased senior women in leadership roles from 8%
in 2019 to 24% in June 2021.
The Group has been recognised for its commitment to
sustainability, having achieved an AA sustainability rating from
MSCI in March 2021. 6. Capital-light business, with strong focus
and track record of cost discipline
Petrofac has a disciplined approach to capital allocation and
bidding with a focus on maintaining a strong balance sheet and
returning to a net cash position. The Company's recent divestments
in non-core assets accelerated the transition to a capital-light
business, enabling lower capital expenditure in the E&C and EPS
businesses (2.7% of EBITDA in the six months ended 30 June 2021)
and high free cash flow generation as Petrofac returns to
growth.
The successful refinancing of all near-term maturities, through
the Refinancing Plan, will reinforce Petrofac's balance sheet and
liquidity position enabling it to be at an optimal position to
benefit from the expected market recovery. The Company has
introduced multiple cost-reduction measures to reduce overhead and
project support costs, while preserving core capabilities. The
Company is on track to deliver more than USUSD250 million cost
savings relative to pre-pandemic levels. 7. Reinforced compliance
structure
The Group's commitment to the highest level of ethical and
effective governance is supported by a culture of integrity,
transparency, and trust. The Group's compliance framework utilises
a three lines of defence approach, with each line forming a
feedback loop that informs improvement: leadership & people,
processes & controls, and assurance. There is a strong
alignment between management incentives and ESG performance
metrics, with ESG performance metrics making up on average 40% of
senior leadership incentives. Over the last several years, the
Group has strengthened its cultural focus on ethical conduct,
supported by a well-developed, independently-audited compliance and
governance regime committed to best-in-class compliance systems and
practices. MSCI's ESG ratings upgraded the Group to "AA" in March
2021, denoting industry leadership, with the Group's "robust
business ethics policies driving the upgrade" and rating the
Group's business ethics policies "strong" relative to peers, its
corporate governance practices as "leading those of peers" and
highlighting improvement since 2020.
The Company has established a Board Compliance & Ethics
Committees which oversees and upholds implementation of principles
and rules relating to compliance and ethics and provide assurance
to Petrofac's shareholders that policies and standards are both
adequate and effective.
The changes implemented have led to the creation of a highly
qualified compliance leadership team based in Sharjah, including
new Group General Counsel, Chief Compliance Officer and
Investigations Director and dedicated officers in major operating
hubs.
Furthermore, the Company has made significant investments in new
technologies with new confidential reporting tools and externally
hosted due diligence screening tools and has established an
independent compliance investigations team.
The Company's implementation of an independent review and
subsequent regular audit process reporting directly to the
Compliance & Ethics Committee adds additional layers to and
further strengthened its compliance structure.
A revised Code of Conduct was launched in January 2020, with
mandatory eLearning training for employees and third parties who
work with the Group to ensure that expected standards and
behaviours are understood and enacted.
With the new compliance structure implemented, Petrofac has
established a Zero tolerance approach to Code of Conduct breaches,
retaliation, victimisation and bullying and harassment. 8.
Reinvigorated management team with demonstrable expertise
The appointment of a new CEO, Sami Iskander, with more than
30-years of international experience in both oilfield services and
upstream exploration and production companies immensely strengthens
the Company's leadership. Sami is supported by a new CFO, Afonso
Reis e Sousa, with almost a decade at Petrofac, in a number of
roles including most recently as Group Treasurer and Head of Tax,
Insurance and Risk. The new leadership team has a wealth of
experience in the sector and is well positioned to lead the
transformation of the Company and has established clear values to
underpin the Group's purpose and societal licence to operate, which
govern how Petrofac functions. Clearly defined behavioural
expectations set by the Petrofac Board for those that work for and
with the Group support a culture of superior performance coupled
with high standards of ethical business conduct.
3.3 Strategy
As announced in April 2021 at its full year results, the Group's
strategy is underpinned by three overarching objectives:
best-in-class delivery, returning to growth and generating superior
returns.
Best-in-class delivery
Best-in-class delivery requires an optimal execution structure
supported by technology, lean, efficient processes, and local,
customer-focused delivery to a global standard where quality and
value are independently assured, and risks mitigated.
Simplify the organisation
Petrofac is simplifying its organisation, creating a streamlined
structure supported by technology and efficient processes. This
includes the establishment of a collaborative technical
organisation 1tec, which brings together the Group's technical
experts in a series of "Functions" such as proposals, engineering,
supply chain and quality assurance, to ensure that best practices
are developed and shared effectively across the Group and that
Petrofac's teams across the globe deliver world class performance
in every location.
This efficient and digitally enabled organisation is also
expected to further enhance the Group's cost competitiveness,
leaving it well positioned to rebuild its Backlog when the market
recovers and to consistently deliver premium margins for
shareholders.
Global capability, location execution
The enhanced organisational structure, with 1tec as its
backbone, will aim to ensure that projects are executed to one
global standard in all countries in which Petrofac operates, via a
local, customer focused delivery system. This local delivery model
is expected to bring the Group closer to its customers and deepen
Petrofac's understanding of the markets in which it operates, which
will further de-risk execution and enhance profitability.
At the same time, Petrofac will continue to maximise in-country
value (measured by the value of local expenditure on goods and
services), a source of competitive advantage, by investing in new
local leadership with the mandate to build strong and resilient
businesses, underpinned by supply chains, in key markets. For
reference, Petrofac's in-country-value expenditure in 2020 was 53%
on non-joint venture projects and significantly higher in certain
core geographies. When submitting bids for new work,
in-country-value is a key metric evaluated by customers and
Petrofac's success rate in winning tenders confirms that it is a
market leader on this front.
Digitally enabled
Petrofac has invested, and continues to invest, heavily in its
digital capability which, coupled with technical expertise,
enhances productivity and provides optimal solutions to customers
while driving greater consistency and cost reduction across
portfolios.
For example, in December 2020, Petrofac's work to digitalise its
operations and maintenance delivery was recognised with a
prestigious award from Oil & Gas UK, the leading representative
body for the offshore energy industry in the UK. Combining digital
twin and mobile technologies with the Group's proprietary software,
BuildMETM, Petrofac has digitalised its inspection processes.
Proven across more than 4,000 North Sea inspections, the approach
has driven a 200% improvement in productivity.
The Group has also made significant investments in its internal
systems to increase automation and drive efficiency. These
investments have already improved the Group's productivity, and
will be an important lever in maximising the Group's cost
competitiveness when pursuing future contract awards.
Strategic partnerships
Petrofac has a number of successful strategic partners, which
allow customers to benefit from combined expertise as well as
delivering higher in country-value.
In NES, Petrofac is forming strategic partnerships with both
developers and technology providers. These customer-centric
relationships not only facilitate the development of projects now,
but also enhance the Group's ability to pursue future
opportunities.
For example, Petrofac has formed a global technical delivery
alliance ("TDA") with Storegga, which has the potential to be the
first industrial-scale carbon capture and storage project in the
UK. The TDA combines Petrofac's world class engineering, project
delivery and operational expertise with Storegga's project
development capability, supporting fast-track delivery of critical
net zero infrastructure both in the UK and internationally.
Technology neutral
In addition, as a technology-neutral service provider, Petrofac
will continue to leverage its subject matter experts to offer
optimal bespoke solutions to customers, without being limited by
the need to deploy any particular in-house technologies.
This not only enables the Group to provide optimal solutions to
its customers, but it also maximises the market opportunities
available to Petrofac. This is particularly relevant for the new
energies segment where there is a wide array of new technologies,
each of which is limited to specific niches within particular
sub-sectors. For instance, the Group estimates that there are
around 1,000 large industrial sites suitable for carbon capture in
Europe alone, which will all require bespoke solutions to suit each
producer's exhaust volumes, CO2 gas percentage, and the physical
layout of its facilities. A wide range of technologies will be
required to provide solutions across this heterogeneous opportunity
set, and Petrofac's technology-neutral approach ensures that it can
serve the entirety of this market.
Return to growth
Petrofac's focus on return to growth will be supported by
improving customer centricity, becoming closer to both existing and
new customers to drive growth in core markets, pursue growth
opportunities in selective new markets, and accelerate the Group's
expansion into new energies.
Customer-centric approach
The Group has long-standing customer relationships in its core
addressable geographies, such as Oman, Algeria and Kuwait, where it
has demonstrated a continuous presence, a commitment to building
local supply chains, and a reputation for strong delivery and
execution. To further enhance its influence and performance in
these key countries, Petrofac is appointing dedicated country
managers to continuously engage with customer executive management
teams and local authorities and to deepen its understanding of
local suppliers and subcontractors.
In Petrofac's growth geographies (as described below), it is
appointing local business development leaders based in country, to
engage with potential customers, establish Petrofac as a credible
service provider and develop a pipeline of new opportunities.
Rebuild the Backlog
Petrofac aims to re-build its Backlog by leveraging its
extensive track record and targeting opportunities in its growing
addressable core and growth markets, which it believes are well
placed for a robust recovery. The Directors also believe that the
Group's decisive action to cut costs, in combination with
efficiencies it has gained through simplifying the organisation,
leave Petrofac well positioned for a strong recovery across its
operations.
The Group is expected to enter a period of strong growth in
project awards once the pandemic pressure eases. The Group intends
to capitalise on its strong 2022 bidding pipeline, which benefits
from a large and growing addressable market, including new
energies. As discussed in "- Key Strengths" above, the Group's
E&C pipeline is exposed to the most attractive growth markets
in MENA (Algeria, Kuwait and Oman) which constituted 65% of the
Group's MENA E&C revenue from 2014 to 2020 and where the
Company maintained historical win rates of 30-50% from 2015 to
2021.
The Group experienced a sharp decline in awarded contracts in
2020 and the year to date in 2021, caused by the COVID-19 pandemic
and oil price crash, the degree of which has not been experienced
in recent history. As a result and with the oil price recovery,
management believes that there will be a sustained recovery with a
significant increase in awards in 2022.
The E&C pipeline is well complemented by the robust USUSD14
billion EPS pipeline, which has proven its resilience during the
pandemic.
Selective growth in new geographies
As well as executing projects in its core markets, Petrofac will
target opportunities across the wider MENA region, as well as other
growth markets, such as Russia, India, Libya and Kazakhstan. These
opportunities will be pursued in a disciplined way, consistent with
Petrofac's conservative bidding approach. For example, when
Petrofac entered the EPC market in India in 2018, it secured a
small refinery project with a value of USUSD135 million. Similarly,
it has recently entered Libya with a c.USUSD100 million EPC
contract having built a close relationship with the NOC through the
delivery of several front-end engineering and design ("FEED")
contracts. This measured approach enabled Petrofac to develop a
deep knowledge of local markets and supply chains before bidding on
larger projects.
Leverage capabilities in new energies
Building on its extensive experience, Petrofac will target
opportunities within new energies, namely offshore wind, carbon
capture and storage, waste-to-fuels/energy and hydrogen. In
aggregate, these opportunities are expected to represent USUSD20
billion by 2025 based on the Group's market analysis.
The Directors believe that Petrofac's capability and track
record in engineering, construction, operations and maintenance
leave it well-equipped to deliver an array of projects across the
new energy industries. Petrofac already has a 10-year track record
in offshore wind and is currently executing three EPC contracts for
offshore substations in Europe. Furthermore, it is pursuing a
substantial pipeline of over USUSD3 billion of offshore wind
opportunities scheduled for award to the industry by the end of
2022. While the other target sectors are less mature, rapid growth
is expected, based on the Group's market analysis. Consistent with
its strategy, in the first half of 2021 Petrofac secured 14
contracts covering carbon capture, utilisation & storage
("CCUS"), blue and green hydrogen and waste-to-fuels. These
early-stage concept and FEED contracts have the potential to
develop into material project awards, leveraging Petrofac's
differentiated life-of-asset customer offering.
Superior returns
The Group has established a new value assurance framework that
will capture and address key risks and drive consistent execution
across the Group's portfolio in order to further enhance its
ability to deliver strong, consistent margins while maintaining the
flexibility of an asset-light business model.
The Group believes that this approach, and the key components of
the framework set out below, are supported by a prudent financial
policy, which is expected to support its aim of returning to an
investment grade rating profile over the medium-term.
Enhanced risk management framework
Petrofac is implementing and embedding the "One Petrofac"
operating model into the Group's operations, which includes an
enhanced "Value Assurance" framework. A Value Assurance team will
provide independent, objective oversight during the preparation of
proposals and during the execution of projects and operations. This
team will participate in formal reviews at specific milestones
throughout the project life cycle to help assess the quality of
Petrofac's efforts and to identify key risks that require
mitigation. They will not have financial performance objectives but
rather will focus entirely on best-in-class performance across the
entire lifespan of Petrofac's projects, from conception to
completion.
Deliver premium margins, consistently
Petrofac has a strong reputation for operational excellence and
earning differentiated margins. By standardising its execution
practices via 1tec and deploying an independent Value Assurance
team, the Directors believe that Petrofac will reduce risk during
execution and return to delivering consistent sector-leading
margins.
Capital-light business model
Over recent years, Petrofac has transitioned back to its core
activities, providing services to infrastructure assets in the
energy sector, including growing demand within new energies, and
has largely divested its non-core and capital-intensive Integrated
Energy Services portfolio. This asset-light business model is
highly cash flow generative and as the business returns to growth
and premium margins, Petrofac will be well placed to deliver
attractive returns for shareholders.
Maintain strong balance sheet
Over the medium term, the Group intends to return to a net cash
position. Maintaining a strong balance sheet is a key component of
the Group's strategy and will enable it to reinstate a sustainable
dividend over time. The successful refinancing of all near-term
maturities, through the Refinancing Plan, will deleverage the
Group's balance sheet, extend the maturity profile of the Group's
financing arrangements and strengthen the Group's capital
structure. This will increase the financial flexibility and
stability of the Group and improve the credit perception of
Petrofac.
Financial implications
The Petrofac Board firmly believes that successful
implementation of the strategies outlined above will result in a
growing, profitable business with premium margins underpinned by
strong cost competitiveness and consistent execution, resulting in
a strong balance sheet.
In the medium-term the Board is targeting:
-- Group revenue of USUSD4-5 billion;
-- New energies contributing more than 20% of revenue or
approximately USUSD1 billion;
-- EBIT margins of 6-8%; and
-- Net cash position enabling Petrofac to reinstate a
sustainable dividend over time. 4. Use of Proceeds
The Group intends to use the net proceeds from the Capital Raise
of USUSD259 million (GBP188 million), in combination with: (i) the
proceeds of a bridge financing facility in the amount of USUSD500
million; (ii) a new ADCB facility in the amount of AED185 million
(USUSD50 million); and (iii) cash available on its balance sheet,
in order to pay, in January and February 2022, the GBP77 million in
penalties and fees imposed by the Southwark Crown Court in relation
to the SFO Investigation and to repay indebtedness under its
existing revolving credit facility (USUSD546 million), its existing
term loan with ADCB (USUSD90 million), its commercial paper under
the CCFF (GBP300 million) and an existing overdraft facility
(USUSD8 million), as well as estimated fees and expenses in
connection with its refinancing plan (USUSD36 million). Taken
together, these actions will extend the Group's debt maturities and
strengthen the Group's platform to execute its strategy. 5. Current
Trading and Prospects
Since 30 June 2021, the Group's trading and financial
performance has remained steady and in line with expectations, with
E&C Business Performance Net Margin for the year expected to be
in line with 2020 and EPS Business Performance Net Margins expected
to be 5-6% for full-year 2021.
Backlog has developed as expected, with E&C Backlog reducing
modestly as a result of the Group's execution of ongoing projects
in recent months, partially offset by the award to deliver the
Erawin Field Development Project Phase 1 Early Production
Facilities project with Zallaf Libya Oil & Gas Exploration and
Production Company in a contract valued at over USUSD100 million.
In EPS, Backlog has remained stable, with new order intake broadly
in line with revenue during the period since 30 June 2021,
reflecting new awards by Tatweer Petroleum to support its gas
distribution network in Bahrain and by Petronas in Malaysia. In
EPS, the Group expects a book-to-bill for full-year 2021 (and
beyond) of at least 1x.
In the third quarter of 2021, the Group experienced an increase
in net debt to USUSD371 million (excluding USUSD127 million IFRS 16
lease liabilities) as at 30 September 2021, representing gross debt
of USUSD1,209 million and cash and short-term deposits of USUSD711
million, from USUSD188 million as at 30 June 2021 (excluding
USUSD141 million IFRS 16 lease liabilities). High cash collections
in late June reduced net debt from approximately USUSD290 million
as reported in the Group's trading update on 24 June to USUSD188
million at 30 June before normalising in the third quarter. The
increase in net debt in the third quarter was in line with the
Company's expectations, albeit exacerbated by timing of receipts on
certain projects and a low number of new awards in the E&C
division during the quarter.
Against the backdrop of volatile trading conditions and the
prolonged impact of the COVID-19 pandemic on the sector, the
Group's outlook for the macro operating environment continues to
improve for the coming months and years. Brent oil prices reached
new highs in the third quarter of 2021, and this rally is forecast
to continue in the coming months, with year-end Brent projected by
industry sources to reach USD90 boe. The Group expects to secure at
least one large E&C project over the remainder of 2021, and it
has observed an increase in bidding activity that is expected to
continue in the coming months. Furthermore, the Group has received
positive feedback from clients following the resolution of the SFO
Investigation in October 2021. Order intake in EPS is expected to
be strong in the remainder of 2021, and this momentum is expected
to continue into 2022.
As this information is preliminary and in some cases refers to
future periods, it is subject to change, and those changes could be
material. 6. Financial Impact of the Capital Raise
Had the Capital Raise taken place as at the last balance sheet
date, being 30 June 2021, adjusted for the draw down on the
revolving credit facility which increased by USUSD196 million
between June 2021 and September 2021, the effect on the balance
sheet would have been to decrease Petrofac's pro forma net debt to
USUSD172 million. In the same period cash increased by USUSD3
million, however cash increase is not included in the pro forma net
debt. 7. Principal Terms of the Firm Placing and Open Offer
The Company is proposing to raise proceeds of approximately
USUSD259 (GBP188 million) (net of fees, costs and expenses) by way
of:
(i) a Firm Placing of 87,119,226 Firm Placing Shares, to raise
gross proceeds of USUSD138.0 million (GBP100.2 million); and
(ii) a Placing and Open Offer of 86,478,186 Open Offer Shares,
to raise gross proceeds of USUSD137.0 million (GBP99.4
million),
(together, the "Capital Raise"), in each case at the Issue Price
of GBP1.15 (USUSD1.58) per New Share. The New Shares will be issued
credited as fully paid and will rank pari passu in all respects
with the Existing Shares, including for dividends.
The Capital Raise is being fully underwritten by the Joint
Bookrunners, subject to certain customary conditions in the Placing
Agreement. The Capital Raise is conditional on, among other things,
the Resolutions having been passed by Shareholders at the General
Meeting.
A cash box structure will be used for the issue of the Firm
Placing Shares and the Open Offer Shares. The Board has considered
the best way to structure the proposed equity capital raise in
light of the Group's current financial position. The decision to
structure the equity capital raise by way of a combination of a
Firm Placing and a Placing and Open Offer takes into account a
number of factors, including the total net proceeds to be raised.
The Board believes that the Firm Placing will enable the Company to
satisfy demand from potential new investors as well as current
Shareholders wishing to increase their equity positions in the
Company. The Board have sought to balance the dilution to existing
Shareholders arising from the Firm Placing with the need to bring
in substantial investors with guaranteed commitments to ensure the
success of the Capital Raise. As a result, 49.8% of the New Shares
being issued will be available to existing Shareholders through the
Open Offer on a pro rata basis.
Offer Price
The Issue Price of GBP1.15 (USUSD1.58) per New Share represents
a 27.2% discount to the Closing Price of GBP1.58 (USUSD2.18) per
Existing Share on the Reference Date. The Issue Price (and the
discount) has been set by the Directors following their assessment
of the prevailing market conditions and anticipated demand for the
New Shares. The Board, having taken appropriate advice from its
advisers, believes that the Issue Price (including the discount) is
appropriate in the circumstances.
Firm Placing
The Company proposes to issue 87,119,226 Firm Placing Shares to
Firm Placees at the Issue Price, on a non-pre-emptive basis. The
Firm Placing will not be subject to clawback to satisfy Open Offer
Entitlements taken up by Qualifying Shareholders.
Placing and Open Offer
Under the Open Offer, Qualifying Shareholders are being given
the opportunity to subscribe for Open Offer Shares pro rata to
their Existing Holdings on the basis of one Open Offer Shares for
every four Existing Shares held by them and registered in their
name at the Record Date (and so in proportion to any other number
of Existing Shares then held) on the terms and subject to the
conditions to be set out in the Prospectus (and, in the case of
Qualifying Non-CREST Shareholders, the Application Form).
To the extent that any Firm Placee or Conditional Placee
procured by the Joint Bookrunners fails to subscribe for any or all
of the Firm Placing Shares and/or Placing Shares which have been
allocated to it, subject to certain conditions, each of the Joint
Bookrunners shall severally subscribe or procure subscribers for
the Firm Placing Shares and/or the Placing Shares at the Issue
Price.
Impact of not applying for New Shares
Any New Shares which are not applied for under the Open Offer
will be allocated to Conditional Placees pursuant to the Placing.
Pursuant to the Placing Agreement, the Joint Bookrunners have
severally agreed to use reasonable endeavours to procure
conditional subscribers (subject to clawback to satisfy Open Offer
Entitlements taken up by Qualifying Shareholders) for the New
Shares at the Issue Price. If the Joint Bookrunners are unable to
procure subscribers for any New Shares that are not taken up by
Qualifying Shareholders pursuant to the Open Offer (including in
the event that a prospective Conditional Placee fails to take up
any or all of the Firm Placing Shares which have been allocated to
it or which it has agreed to take up at the Offer Price), then each
of the Joint Bookrunners has agreed, on the terms and subject to
the conditions set out in the Placing Agreement, severally (and not
jointly or jointly and severally) to subscribe for such New Shares
in the agreed proportions.
Dilution
If a Qualifying Shareholder who is not a Placee does not (or is
not permitted to) take up any of his or her Open Offer
Entitlements, such Qualifying Shareholder's holding, as a
percentage of the Enlarged Share Capital, will be diluted by 33.5%
as a result of the Capital Raise and the Director
Subscriptions.
If a Qualifying Shareholder who is not a Placee takes up their
Open Offer Entitlements in full, such Qualifying Shareholder's
holding, as a percentage of the Enlarged Share Capital, will be
diluted by 16.8% as a result of the Capital Raise and the Director
Subscriptions.
Shareholders in the United States (other than QIBs) and the
other Excluded Territories will not be able to participate in the
Open Offer and will therefore experience dilution as a result of
the Capital Raise and the Director Subscriptions.
Conditionality
The Firm Placing and Placing and Open Offer are conditional,
inter alia, upon:
i. the Resolutions having been passed by Shareholders at the
General Meeting;
ii. the Placing Agreement having become unconditional in all
respects, save for the condition relating to Admission, and not
having been terminated in accordance with its terms before
Admission occurs; and
iii. Admission having become effective by not later than 8:00
a.m. on 15 November 2021 (or such later time and/or date as the
Joint Bookrunners, the Sponsor and Petrofac may agree, not being
later than 29 November 2021).
If any of the conditions are not satisfied or, if applicable,
waived, then the Firm Placing and Placing and Open Offer will not
take place. In such circumstances, application monies will be
returned without payment of interest, as soon as practicable
thereafter.
Upon Admission, the Placing Agreement will not be subject to any
condition or right of termination (including in respect of
statutory withdrawal rights).
Applications will be made to the FCA and to the London Stock
Exchange for the New Shares to be admitted to the premium listing
segment of the Official List and to trading on the London Stock
Exchange's main market for listed securities, respectively. It is
expected that Admission will become effective on 15 November 2021
and that dealings on the London Stock Exchange in the New Shares
will commence by 8.00 a.m. on that date. The New Shares and the
Existing Shares are in registered form and can be held in
certificated form or uncertificated form via CREST. 8. Director
Commitments
Director Commitments
The Directors unanimously recommend investors to vote in favour
of the Resolutions to approve the Capital Raise. All Directors who
are existing Shareholders have committed to vote in favour of the
Resolutions at the General Meeting.
Ayman Asfari, Non-Executive Director, and family hold (in
aggregate) approximately 19% of the Shares in the Company. Mr.
Asfari and family have irrevocably committed to invest at least
USD38 million into the Capital Raise, which they intend to achieve
through participation in both the Firm Placing and the Open Offer.
Mr. Asfari and family's ultimate participation may increase from
this level, but will not exceed the pro-rata entitlement related to
their aggregate shareholding. Following the Capital Raise, Mr.
Asfari and family will hold at least 17.1% of the Enlarged Share
Capital.
The Company is grateful to Mr Asfari and family for their
commitment with respect to the Capital Raise, and their ongoing
support of the business.
In addition, all of the Directors other than Mr. Asfari have
committed to invest in the Company, in connection with the Capital
Raise and at the Issue Price, pursuant to a direct subscription
with the Company for the purchase of additional Shares (conditional
upon Admission), the details of which are set out below
(individually each a "Director Subscription" and which, taken
together, shall comprise the "Director Subscriptions"):
-- Sami Iskander, Group CEO, does not currently hold any Shares
in the Company following his appointment as CEO earlier this year.
Mr Iskander has committed to subscribe for Shares at the Issue
Price for an aggregate price of GBP250,000.
-- All other Directors have committed to subscribe Shares at the
Issue Price, at a minimum, pro-rata to their shareholdings acquired
by virtue of their position as directors or as employees of the
Company.
In aggregate, 308,673 Shares are expected to be issued by the
Company in connection with the Director Subscriptions and the
Company will raise additional proceeds of approximately
USUSD488,922 (GBP354,974).
Related Party Transactions
Ayman Asfari and family
Ayman Asfari and family are a substantial shareholder for the
purposes of Chapter 11 of the Listing Rules and Mr Asfari is a
director of the Company. Mr Asfari and family are therefore
considered to be a related party for the purposes of Chapter 11 of
the Listing Rules. Mr Asfari and family have irrevocably committed
to subscribe for New Shares in the Capital Raise with an aggregate
value of approximately USUSD38 million.
This commitment constitutes a related party transaction under
Listing Rule 11.1.5R and is of sufficient size to require
Shareholder approval under Listing Rule 11.1.7R(3). This approval
will be sought at the General Meeting and Mr. Asfari and family
will not vote such resolution. Any additional New Shares issued to
Mr. Asfari and family as a result of their taking up Open Offer
Entitlements are exempt from the rules regarding related party
transactions under chapter 11 of the Listing Rules.
Directors
Each Director is a related party of the Company for the purposes
of the Listing Rules. Pursuant to the Director Subscriptions, each
of the Directors (other than Mr. Asfari) has agreed to subscribe
for Shares at the Issue Price, conditional upon Admission. The
Director Subscriptions fall within the scope of the Listing Rules,
however, due to the size of each Director Subscription relative to
the Company's market capitalisation, the Director Subscriptions are
exempt from the rules regarding related party transactions under
chapter 11 of the Listing Rules. 9. Dividend Policy
The Group's current dividend policy targets a dividend cover
over the long term of between 2.0x and 3.0x business performance
net profit. However, in April 2020, the Board suspended the payment
of the final dividend in response to the COVID-19 pandemic and the
fall in oil prices. The Board recognises the importance of
dividends to shareholders, but in light of current market
conditions has decided that dividend payments will remain suspended
and therefore no interim dividend will be paid in respect of 2021.
10. General Meeting Arrangements
A notice convening a general meeting of Petrofac to be held at
the offices of Linklaters LLP at One Silk Street, London EC2Y 8HQ
at 10.00 a.m. on 12 November 2021 will be included in the
Prospectus. The General Meeting is being held for the purpose of
considering and, if thought fit, passing the Resolutions. A summary
and explanation of the Resolution is set out below, but please note
that this does not contain the full text of the Resolutions and you
should read this section in conjunction with the Resolution in the
Notice of General Meeting. 11. Resolutions
Your attention is drawn to the fact that the Capital Raise is
conditional and dependent upon the Resolutions being passed.
In summary, the resolutions seek the approval of
Shareholders:
-- Resolution 1: to issue 23,783,684 New Shares to Ayman Asfari
and family pursuant to the Capital Raise, in light of Mr. Asfari
and family being related parties of the Company for the purposes of
the Listing Rules.
-- Resolution 2:
o to the terms of the Capital Raise to be set out in the
Prospectus; and
o to grant the Board authority to allot Shares pursuant to the
Capital Raise and the Director Subscriptions.
The Resolutions will be proposed as ordinary resolutions
requiring a simple majority of votes in favour. The Resolutions
must be approved by Shareholders who together represent a simple
majority of the Shares being voted for (whether in person or by
proxy) at the General Meeting. 12. Importance of Your Vote
The Company is of the opinion that, taking into account the net
proceeds of the Firm Placing and Placing and Open Offer and the
bank and other facilities available to the Group, the Group has
sufficient working capital for its present requirements, that is,
for at least 12 months from the date of this document.
The Resolutions, as set out in paragraph 9 above, must be passed
by Shareholders at the General Meeting in order for the Capital
Raise to proceed and, as a result, the Refinancing Plan to be
implemented. The Directors believe that the Refinancing Plan, which
is contingent upon completion of the Capital Raise, is necessary to
provide the Group and its management with operational and financial
flexibility to implement its new strategy, as described in
paragraph 3 above, including winning new work and re-engaging with
key customers in the Group's traditional markets.
If the Capital Raise does not proceed (and, as a result, the
Refinancing Plan is not implemented), the Group anticipates that it
would continue to experience reduced demand from existing and
targeted clients and difficulty obtaining surety bonds, letters of
credit and guarantees to secure performance under new contracts.
Under these circumstances, if the Group's reasonable worst case
scenario (which it prepared as part of its evaluation of its
working capital requirements, based on its principal risks and
uncertainties) were to transpire, and the Group were unable to
successfully implement the mitigating actions set out below, the
Group may experience a liquidity shortfall of up to USUSD188
million when its borrowings pursuant to the CCFF comes due on 31
January 2022. As described below, an inability to repay the full
balance of the CCFF on its maturity date would also result in a
cross-default under the Group's other financing arrangements that
would entitle lenders to make a repayment demand on balances
outstanding.
If the Capital Raise does not proceed (and, as a result, the
Refinancing Plan is not implemented), and this reasonable worst
case scenario were to transpire, the Group would take a number of
coordinated actions designed to enable it to meet its repayment
obligations under the CCFF and its other financing arrangements,
and to continue to satisfy its covenant requirements, over the next
18 months. Such actions could include, among other things, seeking
waivers from its existing lenders in respect of relevant covenant
test dates, reducing costs, pursuing the monetisation of non-core
assets in order to reduce its net debt position, and entering into
negotiations with its lenders to amend the terms of its existing
financing arrangements, including to extend the terms of these
agreements. The Group believes that it will be in the interests of
its lenders to work with the Group to find an alternative capital
structure or solution which is acceptable to such lenders.
Accordingly, the Directors believe that they have a reasonable
basis to conclude that the combination of mitigating actions
described above would (in the event the Refinancing Plan is not
implemented) enable the Group to avoid a default under its
financing arrangements during the next 12 months. However, any
monetisation of non-core assets is likely to be at a discount to
their market value, and re-negotiations with lenders are likely to
cause the Group to incur significant costs (including, for example,
amendment fees, legal costs and increased interest payments) and to
accept the imposition of restrictions on the ability of management
to pursue its strategy.
If the Group were unable to implement the mitigating actions
described above, and it were unable to repay the amount outstanding
under the CCFF when it comes due on 31 January 2022, it would
result in the following:
-- a cross-default that would entitle lenders to make a
repayment demand on balances outstanding under, and cancel, each of
the Existing Revolving Credit Facility, of which USUSD546 million
was drawn as at 30 September 2021, the USUSD90 million Existing
ADCB Term Loan Facility, which was fully drawn as at 30 September
2021, and the USUSD50 million Existing RAK Term Loan Facility,
which was fully drawn as at 30 September 2021, creating an
aggregate shortfall with the CCFF of up to USUSD874 million;
and
-- a potential cross-default or cross-acceleration of a further
USUSD2,870 million (as at 30 September 2021) in respect of the
Group's ordinary course surety bonds, letters of credit and
guarantees, including the potential requirement to post cash
collateral to banks where such requirement arises as a result of
the on-demand nature of that facility. There is also a risk that
client beneficiaries of such ordinary course surety bonds, letters
of credit and guarantees make a call under that instrument versus
the issuing banks, such liability then being counter-indemnified by
the Group in a potential aggregate (or client calls on the
aggregate guarantee amount of USUSD3,294 million, as at 30
September 2021).
In such case, the Group does not expect that it would have
access to funds immediately available to repay amounts that would
come due at that time. In this circumstance, Shareholders are at
risk of losing all or a substantial amount of their investment as
the Group would be facing insolvency.
Accordingly, the Board believes that the successful completion
of the Capital Raise and the implementation of the Refinancing Plan
are in the best interests of Shareholders as a whole. As such,
Shareholders are asked to vote in favour of the Resolutions at the
General Meeting. 13. Board Recommendation
The Board, which has been so advised by J.P. Morgan Cazenove,
believes that the terms of Ayman Asfari and family's participations
in the Capital Raise are fair and reasonable insofar as the
Company's Shareholders are concerned. In providing its advice to
the Board, J.P. Morgan Cazenove has taken into account the
Directors' commercial assessment of the relevant related party
transactions.
The Board believes that the Capital Raise and the Resolutions
are in the best interests of the Company and the Shareholders as a
whole and, accordingly, unanimously recommends that the
Shareholders vote in favour of the Resolutions, as the Directors
each intend to do in respect of their own legal and beneficial
holdings, amounting to 65,607,213 Shares (representing
approximately 18.966% of the Company's existing issued share
capital as at 25 October 2021, being the latest practicable date
prior to the date of this document). As described above, each
Director has also committed to subscribe for Shares at the Offer
Price in connection with the Capital Raise.
APPIX III
TERMS AND CONDITIONS OF THE FIRM PLACING AND THE PLACING
IMPORTANT INFORMATION ON THE FIRM PLACING AND PLACING FOR
INVITED PLACEES ONLY
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE FIRM
PLACING (THE "FIRM PLACING") OF NEW ORDINARY SHARES IN PETROFAC
LIMITED (THE "COMPANY") OR THE PLACING OF NEW ORDINARY SHARES IN
THE COMPANY SUBJECT TO CLAWBACK (THE " CONDITIONAL PLACING" AND
TOGETHER WITH THE FIRM PLACING, THE "PLACINGS")) IN RESPECT OF
VALID APPLICATIONS BY QUALIFYING SHAREHOLDERS PURSUANT TO THE OPEN
OFFER (THE "OPEN OFFER", AND TOGETHER WITH THE PLACINGS, THE
"CAPITAL RAISE"). THE TERMS AND CONDITIONS SET OUT HEREIN ARE FOR
INFORMATION PURPOSES ONLY AND ARE ONLY DIRECTED AT, AND BEING
DISTRIBUTED TO: (A) IF IN A MEMBER STATE OF THE EUROPEAN ECONOMIC
AREA ("EEA"), PERSONS WHO ARE QUALIFIED INVESTORS WITHIN THE
MEANING OF ARTICLE 2(E) OF REGULATION (EU) 2017/1129 (THE "EU
PROSPECTUS REGULATION") ("QUALIFIED INVESTORS "); (B) IF IN THE
UNITED KINGDOM, PERSONS WHO ARE QUALIFIED INVESTORS WITHIN THE
MEANING OF ARTICLE 2(E) OF THE PROSPECTUS REGULATION (REGULATION
(EU) 2017/1129 AS IT FORMS PART OF RETAINED EU LAW AS DEFINED IN
THE EU (WITHDRAWAL) ACT 2018) (THE "UK PROSPECTUS REGULATION") AND
FALL WITHIN THE DEFINITION OF "INVESTMENT PROFESSIONALS" IN ARTICLE
19 (5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL
PROMOTION) ORDER 2005, AS AMED (THE "ORDER") OR ARE PERSONS FALLING
WITHIN ARTICLE 49(2) OF THE ORDER AND WHO ARE QUALIFIED INVESTORS;
(C) IF IN THE UNITED STATES, CERTAIN PERSONS REASONABLY BELIEVED TO
BE "QUALIFIED INSTITUTIONAL BUYERS" ("QIBs") AS DEFINED IN RULE
144A ("RULE 144A") UNDER THE U.S. SECURITIES ACT OF 1933, AS AMED
(THE "SECURITIES ACT"); OR (D) ANY OTHER PERSONS TO WHOM IT MAY
OTHERWISE LAWFULLY BE COMMUNICATED; AND, IN EACH CASE, HAVE BEEN
INVITED TO PARTICIPATE IN THE FIRM PLACING AND/OR THE CONDITIONAL
PLACING BY THE JOINT BOOKRUNNERS (ALL SUCH PERSONS TOGETHER BEING
REFERRED TO AS "RELEVANT PERSONS").
THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR
RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY PERSON WHO
HAS RECEIVED OR IS DISTRIBUTING THESE TERMS AND CONDITIONS MUST
SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR
INVESTMENT ACTIVITY TO WHICH THESE TERMS AND CONDITIONS RELATE IS
AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH
RELEVANT PERSONS. THESE TERMS AND CONDITIONS DO NOT THEMSELVES
CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN
THE COMPANY.
THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION OF THE UNITED STATES AND THE SECURITIES
MAY NOT BE OFFERED, SOLD, TRANSFERRED OR DELIVERED, DIRECTLY OR
INDIRECTLY IN, INTO OR WITHIN THE UNITED STATES, EXCEPT PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION OF THE UNITED STATES. THERE HAS NOT BEEN AND WILL NOT
BE A PUBLIC OFFERING OF THE SECURITIES IN THE UNITED STATES.
EACH PLACEE (AS SUCH TERM IS DEFINED BELOW) SHOULD CONSULT WITH
ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF
AN ACQUISITION OF PLACING SHARES (AS SUCH TERM IS DEFINED
BELOW).
Unless otherwise defined in these terms and conditions,
capitalised terms used in these terms and conditions shall have the
meaning given to them in this announcement or in the preliminary
circular and prospectus dated 26 October 2021 prepared by, and
relating to, the Company (the "Preliminary Prospectus") in
connection with the offer of the New Shares to be issued by the
Company in connection with the Capital Raise. The Preliminary
Prospectus has not been approved by the Financial Conduct Authority
(the "FCA") under section 87A of the Financial Services and Markets
Act 2000 (as amended) ("FSMA") or otherwise.
In connection with the Capital Raise and Admission, the final
approved combined circular and prospectus (the " Prospectus")
prepared by, and relating to, the Company is expected to be dated
on or around 26 October 2021. The Prospectus will, subject to
approval by the FCA, be published on the Company's website and made
available to you at the Company's registered office. The Prospectus
is not expected to be approved and published prior to Placees
entering into a legally binding commitment in respect of the Firm
Placing or Conditional Placing with the Joint Bookrunners, as
agents of and on behalf of the Company. As such, any commitments
made under the Firm Placing and/or the Conditional Placing will be
on the basis of the Preliminary Prospectus and this
announcement.
The Firm Placing will consist of an offer of new ordinary shares
in the Company (the "Firm Placing Shares") by way of a placing with
institutional investors. The Conditional Placing will consist of an
offer of new ordinary shares in the Company by way of a placing
with new investors subject to clawback by Qualifying Shareholders
pursuant to the Open Offer (the "Conditional Placing Shares" and
together with the Firm Placing Shares, the "Placing Shares"). If a
person indicates to the Joint Bookrunners that it wishes to
participate in the Firm Placing and/or Conditional Placing by
making an oral or written offer to acquire Firm Placing Shares
pursuant to the terms of the Firm Placing and/or Conditional
Placing Shares pursuant to the terms of the Conditional Placing
(each such person, a "Placee"), such person will be deemed: (i) to
have read and understood in their entirety these terms and
conditions in this Appendix and the announcement of which it forms
part and the Preliminary Prospectus; (ii) to be participating and
making such offer on the terms and conditions contained in this
Appendix; and (iii) to be providing the representations,
warranties, indemnities, agreements, undertakings, acknowledgements
and confirmations contained in these terms and conditions in this
Appendix.
In particular, each Placee represents, warrants and acknowledges
that: 1. it is a Relevant Person and undertakes that it will
acquire, hold, manage and dispose of any of thePlacing Shares that
are allocated to it for the purposes of its business only; 2. in
the case of any Placing Shares subscribed for by it as a financial
intermediary as that term is usedin Article 5(1) of the EU
Prospectus Regulation or the UK Prospectus Regulation (as
applicable), if in a memberstate of the EEA or the UK, that: (i)
the Placing Shares acquired by and/or subscribed for by it in the
Placingswill not be acquired and/or subscribed for on a
non-discretionary basis on behalf of, nor will they be acquired
orsubscribed for with a view to their offer or resale to, persons
in a member state of the EEA or the UK (asapplicable) other than
Qualified Investors (as such term is defined in either the EU
Prospectus Regulation or theUK Prospectus Regulation (as
applicable)), or in circumstances which may give rise to an offer
of securities to thepublic other than an offer or resale, in a
member state of the EEA which has implemented the EU
ProspectusRegulation or the UK, to Qualified Investors, or in
circumstances in which the prior consent of the JointBookrunners
has been given to each such proposed offer or resale; or (ii) where
the Placing Shares have beenacquired or subscribed for by it on
behalf of persons in any member state of the EEA or the UK other
than QualifiedInvestors, the offer of those Placing Shares to it is
not treated under the EU Prospectus Regulation or the UKProspectus
Regulation (as applicable) as having been made to such persons; 3.
it is and, at the time the Placing Shares are acquired,
will be either: (i) not located in the UnitedStates (within the
meaning of Regulation S under the Securities Act ("Regulation S"));
acquiring the Placing Sharesin an offshore transaction in
accordance with Regulation S; not a resident of any Excluded
Territories (as definedbelow) or a corporation, partnership or
other entity organised under the laws of any Excluded Territories;
andsubscribing for the Placing Shares for its own account (or for
the account of affiliates or funds managed by it orits affiliates
with respect to which it either has investment discretion or which
are located outside the UnitedStates); or (ii) a QIB, as that term
is defined in Rule 144A, which is (a) aware, and each potential
beneficialowner of the Placing Shares has been advised, that the
sale to it of the Placing Shares is being made in accordancewith
Section 4(a)(2) or another available exemption from, or in a
transaction not subject to, registration underthe Securities Act,
and (b) either acquiring the Placing Shares for its own account, or
for the account ofaffiliates or funds (as described in (i) above),
each of which is a QIB. If the Placee is participating in
thePlacings as or on behalf of a QIB, it agrees to furnish to the
Joint Bookrunners and the Company a signed U.S.investor letter in
the form provided by the Joint Bookrunners and the Company. These
terms and conditions do notconstitute, subject to certain
exceptions, an offer to sell or issue or the invitation or
solicitation of an offerto buy or acquire the Placing Shares in, or
to residents of, any jurisdiction including, without limitation,
theUnited States (subject to certain limited exceptions), the
Commonwealth of Australia, its territories andpossessions, each
province and territory of Canada, Japan, Switzerland and the
Republic of South Africa or anyother jurisdiction where the
extension or availability of the Placings would breach any
applicable laws orregulations (each an "Excluded Territory", and
"Excluded Territories" shall mean any of them); 4. it understands
(or, if acting for the account of another person, such person
understands) the resale andtransfer restrictions set out in this
Appendix; 5. the Company and the Joint Bookrunners will rely upon
the truth and accuracy of the foregoingrepresentations, warranties
and acknowledgements; and 6. these terms and conditions and the
information contained herein are not for release, publication
ordistribution, directly or indirectly, in whole or in part, to
persons in, or who are residents of, the UnitedStates or any other
Excluded Territory, subject to certain exceptions.
In particular, the Placing Shares referred to in these terms and
conditions have not been and will not be registered under the
Securities Act or the securities laws of any state or other
jurisdiction of the United States and the Placing Shares may not be
offered, sold, transferred or delivered, directly or indirectly in,
into or within the United States except pursuant to an exemption
from, or in a transaction not subject to, the registration
requirements of the Securities Act and in compliance with any
applicable laws of any state or other jurisdiction of the United
States. Accordingly, the Placing Shares are being offered and sold
outside the United States in accordance with Regulation S, and in
the United States to a limited number of QIBs pursuant to an
exemption from registration under the Securities Act in a
transaction not involving any public offering. There has not been
and will not be a public offering of the Placing Shares in the
United States. The Placing Shares have not been approved or
disapproved by the U.S. Securities and Exchange Commission, or any
state securities commission in the United States, or any other
regulatory authority in the United States, nor have any of the
foregoing authorities passed upon or endorsed the merits of the
Placings or the accuracy or adequacy of these terms and conditions.
Any representation to the contrary is a criminal offence in the
United States.
The distribution of these terms and conditions and the offer
and/or placing of the Placing Shares in certain other jurisdictions
may be restricted by law. No action has been or will be taken by
any of the Joint Bookrunners or the Company that would, or is
intended to, permit an offer of the Placing Shares or possession or
distribution of these terms and conditions or any other offering or
publicity material relating to the Placing Shares in any
jurisdiction where any such action for that purpose is required,
save as mentioned above. Persons into whose possession these terms
and conditions come are required by the Joint Bookrunners and the
Company to inform themselves about and to observe any such
restrictions.
Each Placee's commitments will be made solely on the basis of
the information set out in the terms and conditions in this
Appendix, this announcement and the Preliminary Prospectus. Each
Placee, by participating in the Placings acknowledges and agrees
that it has not relied on any other information, representation,
warranty or statement made by or on behalf of any of the Joint
Bookrunners or the Company or any of their respective affiliates
and none of the Joint Bookrunners, the Company or any person acting
on such person's behalf or any of their respective affiliates has
or shall have liability for any Placee's decision to accept the
invitation to participate in the Placing based on any other
information, representation, warranty or statement. Each Placee
acknowledges and agrees that it has relied on its own investigation
of the business, financial or other position of the Company in
accepting the invitation to participate in the Placings.
No undertaking, representation, warranty or any other assurance,
express or implied, is made or given by or on behalf of any Joint
Bookrunner or any of its affiliates, their respective directors,
officers, employees, agents, advisers, or any other person, as to
the accuracy, completeness, correctness or fairness of the
information or opinions contained in the Preliminary Prospectus
and/or the Prospectus (when published), this announcement or for
any other statement made or purported to be made by any of them, or
on behalf of them, in connection with the Company, the Capital
Raise or Admission and no such person shall have any responsibility
or liability for any such information or opinions or for any errors
or omissions. Accordingly, save to the extent permitted by law, no
liability whatsoever is accepted by any of the Joint Bookrunners or
any of their respective directors, officers, employees or
affiliates or any other person for any loss howsoever arising,
directly or indirectly, from any use of this announcement or such
information or opinions contained herein or otherwise arising in
connection with the Preliminary Prospectus and/or the Prospectus
(when published).
These terms and conditions do not constitute or form part of,
and should not be construed as, any offer or invitation to sell or
issue, or any solicitation of any offer to purchase or subscribe
for, any Placing Shares or any other securities or an inducement or
recommendation to enter into investment activity, nor shall these
terms and conditions (or any part of them), nor the fact of their
distribution, form the basis of, or be relied on in connection
with, any investment activity. No statement in this announcement is
intended to be nor may be construed as a profit forecast and nor
should any such statement be interpreted to mean that the Company's
profits or earnings per share for any future period will
necessarily match or exceed historical published profits or
earnings per share of the Company.
Proposed Firm Placing of Firm Placing Shares and Conditional
Placing of Conditional Placing Shares subject to clawback in
respect of valid applications by Qualifying Shareholders pursuant
to the Open Offer
Placees are referred to these terms and conditions in this
Appendix, this announcement and the Preliminary Prospectus
containing details of, inter alia, the Capital Raise. These terms
and conditions in this Appendix, this announcement, the Preliminary
Prospectus and the Prospectus have been prepared and issued, or
will be issued, by the Company, and each of these documents is and
will be the sole responsibility of the Company.
A cash box structure will be used for the issue of the New
Shares. The Company will allot and issue the New Shares to the Firm
Placees, the Conditional Placees and those Qualifying Shareholders
who take up their Open Offer Entitlements, in consideration for
Goldman Sachs transferring its holding of ordinary and preference
shares in a Jersey incorporated subsidiary of the Company to the
Company. Accordingly, instead of receiving cash consideration for
the issue of New Shares, at the conclusion of the Capital Raise,
the Company will own the entire issued share capital of the Jersey
company whose only assets will be its cash reserves and the
intercompany balance due to it from the Company referred to above,
which together will represent an amount approximately equal to the
proceeds of the Firm Placing and Placing and Open Offer (net of any
agreed commissions and expenses).
The Joint Bookrunners have agreed severally, and not jointly or
jointly and severally, pursuant to the Sponsor's and Placing and
Open Offer Agreement (the "Sponsor and Placing Agreement"), as
agent for the Company, to use reasonable endeavours to procure
subscribers for the New Shares at the Offer Price under the
Placings. Placees for Conditional Placing Shares in the Conditional
Placing are subject to clawback to satisfy valid application by
Qualifying Shareholders under the Open Offer. The Firm Placing
Shares are not subject to clawback and do not form part of the
Placing and Open Offer. The Firm Placing and Placing and Open Offer
have been fully underwritten by the Joint Bookrunners on, and
subject to, the terms and conditions of the Sponsor and Placing
Agreement (save in respect of any New Shares which are taken up by
the directors who have given an irrevocable undertaking to the
Company to do so).
If the Joint Bookrunners are unable to procure Firm Placees for
any of the Firm Placing Shares (or if a prospective Firm Placee
fails to take up any or all of the Firm Placing Shares which have
been allocated to it or which it has agreed to take up at the Issue
Price), then each of the Joint Bookrunners has agreed, on the terms
and subject to the conditions set out in the Sponsor and Placing
Agreement, severally (and not jointly or jointly and severally) to
subscribe for such Firm Placing Shares at the Issue Price in its
agreed proportion.
If the Joint Bookrunners are unable to procure Conditional
Placees for any of the Open Offer Shares that are not taken up by
Qualifying Shareholders pursuant to the Open Offer (or if a
prospective Conditional Placee fails to take up any or all of the
Conditional or Open Offer Shares which have been allocated to it or
which it has agreed to take up at the Issue Price), then each of
the Joint Bookrunners has agreed, on the terms and subject to the
conditions set out in the Sponsor and Placing Agreement, severally
(and not jointly or jointly and severally) to subscribe for such
Open Offer Shares at the Issue Price in its agreed proportion.
Application for listing and admission to trading
Applications will be made to the FCA for admission of the New
Shares to listing on the premium listing segment of the Official
List of the FCA and to the London Stock Exchange for admission of
the New Shares to trading on its main market for listed
securities.
Application will also be made to Euroclear UK & Ireland
Limited for the entitlements to the Open Offer Shares (the " Open
Offer Entitlements") to be admitted as separate participating
securities within CREST. Subject to the conditions of the Sponsor
and Placing Agreement being satisfied, it is expected that
Admission of the New Shares will become effective on 15 November
2021 and that dealings for normal settlement on the London Stock
Exchange in the New Shares will commence at 8.00 a.m. on the same
day.
The New Shares issued under the Firm Placing, Conditional
Placing and Open Offer, when issued and fully paid, will be
identical to, and rank pari passu in all respects with, the shares
in the capital of the Company (the "Existing Shares") including the
right to receive all dividends and other distributions declared,
made or paid on the Existing Shares by reference to a record date
on or after Admission.
Subject to the conditions below being satisfied, it is expected
that Admission will become effective on 15 November 2021 and that
dealings for normal settlement in the Open Offer Shares will
commence at 8.00 a.m. on the same day.
The Firm Placing, Conditional Placing and Open Offer are
conditional, inter alia, upon: a. the Prospectus being approved by
the FCA by no later than 4.00 p.m. on 26 October 2021 and being
madeavailable to the public by no later than 5.00 p.m.] on that day
(or, in each case, such later time and/or date asthe Joint
Bookrunners may, acting jointly and in good faith, agree with the
Company); b. the Resolutions being passed by Shareholders at the
General Meeting; c. Admission occurring by no later than 8:00 a.m.
on 15 November 2021 (or such later time and/or date as theCompany
and the Joint Bookrunners may agree in writing); and d. the Sponsor
and Placing Agreement having become unconditional in all respects,
save for the conditionrelating to Admission, and not having been
terminated by the Joint Bookrunners in accordance with its terms
priorto Admission.
The full terms and conditions of the Open Offer will be
contained in the Prospectus to be issued by the Company in
connection with the Capital Raise and Admission. The Prospectus to
be issued by the Company is expected to be approved by the FCA
under section 87A of the FSMA and made available to the public in
accordance with Rule 3.2 of the Prospectus Regulation Rules made
under Part VI of the FSMA.
Bookbuild of the Placings
The Joint Bookrunners will be conducting an accelerated
bookbuild process commencing immediately following this
announcement (the "Bookbuild") in order to determine demand for
participation in the Placings. The Joint Bookrunners, as agents for
the Company, will seek to procure Placees as part of this
Bookbuild. These terms and conditions give details of the terms and
conditions of, and the mechanics of participation in, the
Placings.
Principal terms of the Bookbuild a. By participating in the
Placings, Placees will be deemed: (i) to have read and understood
the terms andconditions in this Appendix, this announcement and the
Preliminary Prospectus; and (ii) to be participating andmaking an
offer for any Placing Shares on these terms and conditions; and
(iii) to be providing therepresentations, warranties, indemnities,
agreements, undertakings, acknowledgements and confirmations
contained inthese terms and conditions. b. The Joint Bookrunners
are arranging the Placings severally, and not jointly, or jointly
and severally, asagents of the Company. c. Participation in the
Placings will only be available to persons who are Relevant Persons
and who maylawfully be, and are, invited to participate by any of
the Joint Bookrunners. The Joint Bookrunners and theirrespective
affiliates are entitled to enter bids for Placing Shares as
principal in the Bookbuild. d. To bid in the Bookbuild, Placees
should communicate their bid by telephone or in writing to their
usualsales contact at any Joint Bookrunners. Each bid should state
the aggregate number of Firm Placing Shares andConditional Placing
Shares which the Placee wishes to acquire at the Offer Price. e.
The Offer Price will be payable to the Joint Bookrunners (on behalf
of the Company) by the Placees inrespect of the Placing Shares
allocated to them. Bids may be scaled down by the Joint Bookrunners
on the basisreferred to in paragraph (h) below. f. The Bookbuild is
expected to close at short notice on 26 October 2021, subject to
acceleration, but mayclose earlier or later, at the discretion of
the Joint Bookrunners and the Company. The timing of the closing
ofthe books and allocations will be agreed between the Joint
Bookrunners and the Company following completion of theBookbuild.
The Joint Bookrunners may, in agreement with the Company, accept
offers to subscribe for Placing Sharesthat are received after the
Bookbuild has closed. g. An offer to subscribe for Placing Shares
in the Bookbuild will be made on the basis of these terms
andconditions in this Appendix (which shall be deemed to be
incorporated in such offer), this announcement and thePreliminary
Prospectus and will be legally binding on the Placee by which, or
on behalf of which, it is made andwill not be capable of variation
or revocation. h. Subject to paragraph (g) above, the Joint
Bookrunners reserve the right not to accept bids or to acceptbids,
either in whole or in part, on the basis of allocations determined
at the Joint Bookrunners' discretion andmay scale down any bids as
the Joint Bookrunners may determine, subject to agreement with the
Company. Theacceptance of bids shall be at the Joint Bookrunners'
absolute discretion, subject to agreement with the Company. i. If
successful, each Placee's allocation will be confirmed to it by the
Joint Bookrunners following theclose of the Bookbuild. Oral or
written confirmation (at the Joint Bookrunners' discretion) from
the JointBookrunners to such Placee confirming its allocation will
constitute a legally binding commitment upon such Placee,in favour
of the Joint Bookrunners and the Company to acquire the number of
Placing Shares allocated to it (and inthe respective numbers of
Firm Placing Shares and Conditional Placing Shares (subject to
clawback) so allocated) onthe terms and conditions set out herein
(which shall be deemed to be incorporated in such legally
bindingcommitment). Each Placee will have an immediate, separate,
irrevocable and binding obligation, owed to the JointBookrunners,
to pay to the Joint Bookrunners (or as the Joint Bookrunners may
direct) as agent for the Company incleared funds an amount equal to
the product of the Offer Price and the number of Firm Placing
Shares and, onceapportioned after clawback (in accordance with the
procedure described in the paragraph entitled "PlacingProcedure"
below), the Conditional Placing Shares, which such Placee has
agreed to acquire. j. The Company will make a further announcement
following the close of the Bookbuild detailing the number ofPlacing
Shares to be issued (the "Placing Results Announcement"). It is
expected that such Placing ResultsAnnouncement will be made as soon
as practicable after the close of the Bookbuild. k. Irrespective of
the time at which a Placee's allocation(s) pursuant to the Placings
is/are confirmed,settlement for all Placing Shares to be acquired
pursuant to the Placings will be required to be made at the
sametime on the basis explained below under the paragraph
"Registration and Settlement". l. Commissions are payable to
Conditional Placees in respect of the Conditional Placing Shares
which areclawed back pursuant to the Open Offer. For U.S.
regulatory reasons, persons located in the United States and
U.S.persons (as defined in Regulation S) will not be paid a
commission. No commission shall be paid for ConditionalPlacing
Shares which are not clawed back under the Open Offer. No
commissions are payable to any Placees in respectof the Firm
Placing or any Open Offer Shares which are subscribed for under the
Open Offer. m. By participating in the Bookbuild, each Placee
agrees that its rights and obligations in respect of theFirm
Placing and/or Conditional Placing will terminate only in the
circumstances described below and will not becapable of rescission
or termination by the Placee. All obligations under the Placings
will be subject to thefulfilment of the conditions referred to
below under the paragraph "Conditions of the Placings and
Termination ofthe Sponsor and Placing Agreement". n. To the fullest
extent permissible by law, no Joint Bookrunner nor any of its
affiliates nor any of its ortheir respective affiliates' agents,
directors, officers or employees,
respectively, shall have any liability toany Placee (or to any
other person whether acting on behalf of a Placee or otherwise). In
particular, no JointBookrunner nor any of its affiliates nor any of
its or their respective affiliates' agents, directors, officers
oremployees, respectively, shall have any liability (including, to
the extent permissible by law, any fiduciaryduties) to any Placee
(or to any person whether acting on behalf of a Placee or
otherwise) in respect of the JointBookrunners' conduct of the
Bookbuild or of such alternative method of effecting the Placings
as the JointBookrunners and the Company may agree.
Conditions of the Placings and Termination of the Sponsor and
Placing Agreement
Placees will only be called on to subscribe for Placing Shares
if the obligations of the Joint Bookrunners under the Sponsor and
Placing Agreement have become unconditional in all respects and the
Joint Bookrunners have not terminated the Sponsor and Placing
Agreement prior to Admission.
The Joint Bookrunners' obligations under the Sponsor and Placing
Agreement in respect of the Firm Placing, Conditional Placing and
Open Offer are conditional upon, inter alia: o. the Prospectus
being approved pursuant to the Listing Rules and the Prospectus
Rules by the FCA by nolater than 4.00 p.m. on 26 October 2021 (or
such later time and/or date as the Joint Bookrunners may agree with
theCompany); p. Admission occurring by no later than 8:00 a.m. on
15 November 2021 (or such later time and/or date as theCompany and
the Joint Bookrunners may agree in writing; ; q. the passing of the
Resolutions (without amendment or with such amendments as the Joint
Bookrunners mayagree in writing) at the General Meeting on the
General Meeting date (or at any adjournment thereof, or such
laterdate as the Company and the Joint Bookrunners may agree); r.
the warranties on the part of the Company given to the Joint
Bookrunners in the Sponsor and PlacingAgreement being true and
accurate and not misleading in any respect, inter alia, on and as
of the date of theSponsor and Placing Agreement, the applicable
time, the date of publication of the Prospectus, the General
Meetingdate, each time any supplementary prospectus is issued and
immediately before Admission, in each case as thoughthey had been
given and made at such time by reference to the facts and
circumstances then subsisting, and nomatter having arisen prior to
the time of Admission which might reasonably be expected to give
rise to a claimunder Clause 13; s. there not having been, in the
opinion of the Joint Bookrunners, acting jointly and in good faith,
aMaterial Adverse Effect (as that term is defined in the Sponsor
and Placing Agreement), whether or not foreseeableat the date of
the Sponsor and Placing Agreement, at any time prior to Admission;
t. no Supplementary Prospectus being published by or on behalf of
the Company before Admission which theJoint Bookrunners, acting
jointly and in good faith, consider to be material in the context
of the underwriting ofthe New Shares, the Placing and Open Offer or
Admission; and u. since the date of the Sponsor and Placing
Agreement, S&P Global Ratings and Fitch Ratings Ltd having
notdowngraded, or given notice or made any public announcement of
any intended or potential downgrading or of anyreview or
surveillance with negative implications of, the rating accorded to
any debt securities of the Company.
(all such conditions included in the Sponsor and Placing
Agreement being, together, the "Conditions").
The Sponsor and Placing Agreement can be terminated at any time
prior to Admission by the Joint Bookrunners, acting jointly, by
giving notice to the Company in certain circumstances, including
(but not limited to) where:) (a) the Joint Bookrunners become aware
that the Company has breached any of its obligations under the
Sponsor and Placing Agreement, where failure to comply with such
obligations, in the opinion of the Joint Bookrunners (acting
jointly and in good faith and following consultation with the
Company where practicable and legally permissible), is not material
in the context of the underwriting of the New Shares, the Placing
and Open Offer or Admission; (b) the Joint Bookrunners become aware
that any of the warranties is, or if repeated at any time prior to
Admission (by reference to the facts then existing) would be
untrue, inaccurate or misleading; (c) in the good faith opinion of
the Joint Bookrunners (acting jointly) there shall have been a
Material Adverse Effect (as defined in the Sponsor and Placing
Agreement) since the date of the Sponsor and Placing Agreement
(whether or not foreseeable at such date); or (d) the application
for Admission is refused by the FCA and/or the London Stock
Exchange or is withdrawn by the Company.
If any Condition has not been satisfied or (except in the case
of certain Conditions) waived by each Joint Bookrunner, in its
absolute discretion, in writing by the time and date specified or
referred to therein (or such later time and/or date as the Company
and the Joint Bookrunners may agree in writing), all obligations
under these terms and conditions shall cease and terminate.
By participating in the Placings, each Placee agrees that its
rights and obligations hereunder are conditional upon the Sponsor
and Placing Agreement becoming unconditional in all respects and
that its rights and obligations will terminate only in the
circumstances described above and will not be capable of rescission
or termination by it after oral or written confirmation by the
Joint Bookrunners following the close of the Bookbuild.
The Joint Bookrunners may in their absolute discretion in
writing and upon such terms as they think fit waive fulfilment of
certain of the Conditions in the Sponsor and Placing Agreement or
extend the time provided for fulfilment of such Conditions. Any
such extension or waiver will not affect Placees' commitments as
set out in these terms and conditions.
By participating in the Placings each Placee agrees that the
exercise by the Company or any of the Joint Bookrunners of any
right or other discretion under the Sponsor and Placing Agreement,
including (without limitation) any decision made by the Joint
Bookrunners as to whether or not to waive or to extend the time
and/or date for the fulfilment of any condition in the Sponsor and
Placing Agreement and/or (on behalf of the Joint Bookrunners)
whether or not to exercise any termination right, shall be within
the absolute discretion of the Company and each Joint Bookrunner
(as the case may be).
Neither the Company nor either Joint Bookrunner shall have any
liability to any Placee (or to any other person whether acting on
behalf of a Placee or otherwise) in respect of any decision made by
the Joint Bookrunner as to whether or not to waive or to extend the
time and/or date for the fulfilment of any condition in the Sponsor
and Placing Agreement and/or whether or not to exercise any such
termination right.
Withdrawal Rights
Placees acknowledge that their agreement to subscribe for
Placing Shares is not by way of acceptance of the public offer made
in the Prospectus and the Application Form but is by way of a
collateral contract and as such Article 23(2) of the EU Prospectus
Regulation or the UK Prospectus Regulation (as applicable) does not
entitle Placees to withdraw in the event that the Company publishes
a supplementary prospectus in connection with the Capital Raise or
Admission.
Placing Procedure
Placees shall subscribe for the Firm Placing Shares and/or
Conditional Placing Shares to be issued pursuant to the Firm
Placing and/or Conditional Placing (subject to clawback in the case
of the Conditional Placing) and any allocation of the Firm Placing
Shares and Conditional Placing Shares (subject to clawback) to be
issued pursuant to the Firm Placing and/or the Conditional Placing
will be notified to them on or around 26 October 2021 (or such
other time and/or date as the Company and the Joint Bookrunners may
agree).
Placees will be called upon to subscribe for, and shall
subscribe for, the Conditional Placing Shares only to the extent
that valid applications and payment in full by Qualifying
Shareholders under the Open Offer are not received by 11.00 a.m. on
11 November 2021 or if applications have otherwise not been deemed
to be valid in accordance with the terms set out in the Prospectus
and the Application Form.
If you are a Qualifying Shareholder and you take up and pay for
New Shares under the Open Offer to which you are entitled in
accordance with its terms, you may request, by returning an off-set
application form which may be required from the Joint Bookrunners
(the "Off-set Application Form"), that your participation in the
Conditional Placing be reduced by up to the number of New Shares in
your total Open Offer entitlement which you have validly taken up
and paid for under the Open Offer (to a maximum of the number of
New Shares in your Conditional Placing participation) ("Off-set ").
If the Off-set Application Form is not returned by the closing time
for the Open Offer, you will be deemed to have waived your right to
claim Off-set in respect of any New Shares taken up under the Open
Offer.
Payment in full for any Firm Placing Shares and Conditional
Placing Shares so allocated (subject to clawback in the case of the
Conditional Placing Shares) in respect of the Placings at the Offer
Price must be made by no later than 15 November 2021 (or by such
later date as shall be no later than five business days following
Admission, if Admission is delayed). The Joint Bookrunner will
notify Placees if any of the dates in these terms and conditions
should change, including as a result of delay in the posting of the
Prospectus, the Application Forms or the crediting of the Open
Offer Entitlements in CREST or the production of a supplementary
prospectus or otherwise.
Lock-up
The Company has provided certain customary undertakings to the
Joint Bookrunners for the period following Admission, including an
undertaking (subject to certain customary exemptions and carve outs
agreed between the Joint Bookrunners and the Company) not to enter
into certain transactions involving or relating to shares in the
capital of the Company or related securities for a period ending
180 days from the date of Admission without the prior written
consent of the Joint Bookrunners.
By participating in the Placings, Placees agree that the
exercise by the Joint Bookrunners of any power to grant consent to
waive the undertaking by the Company of a transaction which would
otherwise be subject to the lock-up under the Sponsor and Placing
Agreement shall be within the absolute discretion of the Joint
Bookrunners and that they need not make any reference to, or
consult with, Placees and that they shall have no liability to
Placees whatsoever in connection with any such exercise of the
power to grant consent.
Registration and Settlement
Settlement of transactions in the Placing Shares following
Admission will take place within the CREST system, subject to
certain exceptions. The Joint Bookrunners and the Company reserve
the right to require settlement for, and delivery of, the Placing
Shares to Placees by such other means that they deem necessary if
delivery or settlement is not possible or practicable within the
CREST system within the timetable set out in the Preliminary
Prospectus and/or the Prospectus or would not be consistent with
the regulatory requirements in the Placee's jurisdiction. Each
Placee will be deemed to agree that it will do all things necessary
to ensure that delivery and payment is completed in accordance with
either the standing CREST or certificated settlement instructions
which they have in place with the relevant Joint Bookrunner.
Settlement for the Placing Shares will be on a delivery versus
payment basis and is expected to take place on or around 15
November 2021. Interest is chargeable daily on payments to the
extent that value is received after the due date from Placees at
the rate of two percentage points above prevailing SONIA, with
details of the applicable rate to be communicated at the time. Each
Placee is deemed to agree that if it does not comply with these
obligations, the Joint Bookrunners may sell any or all of the
Placing Shares allocated to it on its behalf and retain from the
proceeds, for its own account and benefit, an amount equal to the
aggregate amount owed by the Placee to the Joint Bookrunners (on
behalf of the Company) plus any interest due. By communicating a
bid for Placing Shares, each Placee confers on the Joint
Bookrunners and the Company all such authorities and powers
necessary to carry out any such sale and agrees to ratify and
confirm all actions which the Joint Bookrunners lawfully take in
pursuance of such sale. The relevant Placee will, however, remain
liable for any shortfall below the aggregate amount owed by it and
may be required to bear any stamp duty or stamp duty reserve tax
(together with any interest or penalties) which may arise upon any
transaction in the Placing Shares on such Placee's behalf.
Acceptance
By participating in the Placings, each Placee (and any person
acting on such Placee's behalf) (together, "you") irrevocably
acknowledges, confirms, undertakes, represents, warrants and agrees
(as the case may be) with the Joint Bookrunners and the Company,
the following: 7. you are duly incorporated and validly existing
under the laws of your jurisdiction of incorporation. Youhave power
under your constitutional documents and have obtained all necessary
authorities (including, withoutlimitation, all relevant members'
resolutions) to subscribe and pay for the Placing Shares in the
manner proposedand to enter into and perform your obligations
pursuant to these terms and conditions in this Appendix, and
thereare no governmental or regulatory consents or other third
party approvals, authorisations or orders required inorder for you
to subscribe and pay for the Placing Shares in the manner proposed
and to enter into and perform yourobligations pursuant to these
terms and conditions in this Appendix that have not been or will
not prior toAdmission have been obtained and you have not taken any
action which will or may result in any of the JointBookrunners or
the Company being in breach of the legal or regulatory requirements
of any jurisdiction; 8. your agreement to subscribe for Placing
Shares will comply with all agreements to which you are a partyor
by which you or any of your properties or assets is bound and which
are material to your participation and yourobligations in respect
thereof; 9. the information, if any, relating to you set out in the
Preliminary Prospectus is true and accurate andnot misleading in
any respect and the information relating to you provided or to be
provided to you for inclusionin the Prospectus is or will be true
and accurate and not misleading in any respect; 10. you have
received a copy of this announcement (and the terms and conditions
herein), the PreliminaryProspectus (including the terms and
conditions of the Capital Raise) and all such other information as
you deemnecessary to make an investment decision in relation to the
Placing Shares. Your commitment will be solely on thebasis of the
information contained in the Preliminary Prospectus and this
announcement. You acknowledge howeverthat the Preliminary
Prospectus is in draft form and is subject to updating, completion,
revision, furtherverification and amendment and you agree that you
have relied on your own investigation of the business, financialor
other position of the Company in accepting your Placing
participation; 11. you have funds available to pay the full amount
in respect of your participation in the Placings as andwhen due;
12. you acknowledge and agree that the Placing Shares have not been
and will not be registered under theSecurities Act or with any
securities regulatory authority of any state or other jurisdiction
of the United States.You further understand that the Placing Shares
have not been registered or qualified under the applicable laws
ofthe Commonwealth of Australia, its territories and possessions,
each province and territory of Canada, Japan,Switzerland and the
Republic of South Africa and any other jurisdiction where the
extension into or availability ofthe Firm Placing and Placing and
Open Offer would breach any applicable law or any other
jurisdiction where theextension or availability of the Placings
would breach any applicable laws or regulations (the
"ExcludedTerritories"); 13. You are either:1. not located in the
United States (within the meaning of Regulation S); you are
acquiringthe Placing Shares in an offshore transaction in
accordance with Regulation S; not a resident of any
ExcludedTerritories or a corporation, partnership or other entity
organised under the laws of any Excluded Territories;and
subscribing for the Placing Shares for your own account (or for the
account of your affiliates or fundsmanaged by you or your
affiliates with respect to which you either have investment
discretion or which arelocated outside the United States); OR 2. a
QIB as that term is defined in Rule 144A, which is (a) aware, and
each potential beneficialowner of the Placing Shares has been
advised, that the sale to you of the Placing Shares is being made
inaccordance with Section 4(a)(2) or another available exemption
from, or in a transaction not subject to,registration under the
Securities Act, and (b) either are acquiring the Placing Shares for
your own account or forthe account of affiliates or funds, each of
which is a QIB. If you are participating in the Placing on the
basis ofthis paragraph 7.2, you agree to furnish to the Joint
Bookrunners and the Company a signed U.S. investor letter inthe
form provided by the Joint Bookrunners and the Company; 14. you are
subscribing for the Placing Shares for investment purposes, in each
case, not with a view to, orfor resale in connection with, the
distribution thereof, directly or indirectly, in whole or in part,
into orwithin the United States within the meaning of U.S.
securities laws; 15. you acknowledge and agree that you are not
acquiring the Placing Shares as a result of any
"generalsolicitation or general advertising" as defined in
Regulation D under the Securities Act or any "directed
sellingefforts" as defined in Regulation S; 16. you understand that
the offer and sale of the Placing Shares to you is being made in
reliance on anexemption from, or in a transaction not subject to,
the registration requirements of the Securities Act andacknowledge
and agree that, for so long as the Placing Shares are "restricted
securities" within the meaning ofRule 144(a)(3) under the
Securities Act, none may be offered, sold or pledged or otherwise
transferred except in an"offshore transaction" (as defined in
Regulation S) in accordance with the applicable requirements of
Regulation Sor pursuant to another applicable exemption from
registration under the Securities Act or to the Company, and ineach
case in accordance with any applicable securities laws of any state
or other jurisdiction of the United Statesand the laws of other
jurisdictions. You understand that no representation has been made
as to the availability ofany exemption under the Securities Act for
the reoffer, resale, pledge or transfer of the Placing Shares,
which maybe subject to further applicable restrictions on transfer
of the Placing Shares set forth in this form ofconfirmation in
addition to those restrictions. You agree to notify any transferee
in the United States to whom yousubsequently reoffer, resell,
pledge or otherwise transfer the Placing Shares in a transaction
that is not anoffshore transaction (as defined above) of the
foregoing restrictions on transfer; 17. you are (i) a person of a
kind described in Article 19 and/or Article 49 of the Financial
Services andMarkets Act 2000 (Financial Promotion) Order 2005 (the
"Order") and you understand that the terms and conditionsset
out
herein are directed only at (a) persons who have professional
experience in matters relating to investmentswho fall within the
definition of "investment professionals" in Article 19(5) of the
Order or (b) high net worthentities (including companies and
unincorporated associations of high net worth and trusts of high
value) or otherpersons falling within Article 49(2)(a) to (d) of
the Order, and that, accordingly, any investment or
investmentactivity to which these terms and conditions relate is
available only to you as such a person or will be engaged inonly
with you as such a person; and (ii) not intending to offer or sell
or otherwise deal with the Placing Sharesin any way which would
result in an offer to the public in the UK within the meaning of
the Financial Services andMarkets Act 2000 ("FSMA") or in any other
jurisdiction or require registration or prospectus publication or
similaractions in any other jurisdiction; 18. you understand and
accept that in offering you a participation in the Placings, none
of the JointBookrunners is making any recommendations to or
advising you regarding the suitability or merits of any
transactionyou may enter into in connection with the Capital Raise
or otherwise and that you are not, and do not regardyourself as, a
client of any of the Joint Bookrunners in connection with the
Capital Raise. To the fullest extentpermitted by law, you
acknowledge and agree to the disclaimers contained in this
announcement. You acknowledge thatJ.P. Morgan and Goldman Sachs are
authorised by the Prudential Regulation Authority (the "PRA") and
regulated inthe United Kingdom by the FCA and the PRA. Without
limiting the foregoing, you acknowledge that the JointBookrunners
are acting exclusively for the Company and no-one else in
connection with the Capital Raise, and willnot be responsible to
anyone other than the Company for providing the protections
afforded to their respectiveclients nor for providing advice in
connection with the Capital Raise or any other matter referred to
in theseterms and conditions in this Appendix or this announcement.
19. you understand and accept that the exercise by any of the Joint
Bookrunners of any rights or discretionsunder the Sponsor and
Placing Agreement shall be within the absolute discretion of such
Joint Bookrunner and noJoint Bookrunner need have any reference to
you and shall have no liability to you whatsoever in connection
withany decision to exercise or not to exercise any such right and
you agree that you have no rights against any of theJoint
Bookrunners or the Company, or any of their respective directors
and employees under the Sponsor and PlacingAgreement pursuant to
the Contracts (Rights of Third Parties Act) 1999; 20. you are not a
person whose business is, or includes, issuing depository receipts
or a person whosebusiness is, or includes, the provision of
clearance services for the purchase or sale of securities or a
nomineeof any such person; 21. you declare that sections 67, 70, 93
and 96 of the Finance Act 1986 (depositary receipts and
clearanceservices) do not apply on your acquisition of any Placing
Shares under the Capital Raise (if this is not applicableplease
indicate your status for stamp duty and stamp duty reserve tax
purposes); 22. you have read, agreed with, understood and accepted
the terms and conditions in this Appendix, thisannouncement and the
Preliminary Prospectus and, accordingly, irrevocably agree in
accordance with such terms andconditions to subscribe and pay for
the number of Placing Shares comprised in your participation in the
Placings.In particular, and without limitation, you acknowledge
that your participation in the Conditional Placing issubject to
clawback to satisfy acceptances under the terms of the Open Offer;
23. you acknowledge that your agreement to subscribe for the number
of Placing Shares comprised in yourparticipation in the Placings is
not to be made pursuant to the Prospectus but is made pursuant to
these terms andconditions in this Appendix; 24. you confirm that if
you duly apply and subscribe (on the terms set out in the
Prospectus) for Open OfferShares to which you are entitled, such
application and subscription shall extend to an irrevocable
undertaking tosubscribe for those New Shares at the Offer Price,
following the expiry of the Open Offer, in the event that, as
aresult of your default or otherwise, you have failed to fulfil
your obligation to apply and subscribe for all thoseOpen Offer
Shares to which you are entitled; 25. you have not, in agreeing to
subscribe for Placing Shares, relied on any information,
representations and/or warranties from any of the Joint Bookrunners
or the Company or any of their directors, officers,
agents,representatives, subsidiaries or affiliates or any other
person save for the information contained in thePreliminary
Prospectus and this announcement; 26. you acknowledge that the
content of this announcement, the Preliminary Prospectus and the
Prospectus isexclusively the responsibility of the Company and none
of the Joint Bookrunners nor any person acting on theirbehalf has
or shall have liability for any information, representation or
statement contained in such documents orany information previously
published by or on behalf of the Company and will not be liable for
your decision toparticipate in the Capital Raise based on any
information, representation or statement contained in such
documentsor otherwise; 27. you and any person acting on your behalf
acknowledge that none of the Joint Bookrunners owes anyfiduciary or
other duty to you in respect of any representations, warranties,
undertakings or indemnities in theSponsor and Placing Agreement;
28. you are aware of, have complied with and will continue to
comply with any obligations we have under theCriminal Justice Act
1993, the Proceeds of Crime Act 2002, the Financial Services and
Markets Act 2000 and UK MAR,to the extent applicable to you; 29. if
you are a resident in the EEA, you are a 'Qualified Investor'
within the meaning of the EU ProspectusRegulation (EU) 2017/1129;
30. if you are in Canada, you are entitled under applicable
Canadian securities laws to subscribe for thePlacing Shares without
the benefit of a prospectus qualified under such securities laws
and without limiting thegenerality of the foregoing, are: (a) an
"accredited investor" as defined in section 1.1 of National
Instrument45-106 - Prospectus Exemptions or subsection 73.3(1) of
the Securities Act (Ontario); and (b) a "permitted client"(as
defined in section 1.1 of National Instrument 31-103 Registration
Requirements, Exemptions and OngoingRegistrant Obligations); 31.
you are aware of your obligations in connection with money
laundering under the Proceeds of Crime Act2002 and have complied
with the Money Laundering Regulations 2017 and any other applicable
legislation concerningprevention of money laundering (the
"Regulations") and, if you are making payment on behalf of a third
party, youhave obtained and recorded satisfactory evidence to
verify the identity of the third party as required by
theRegulations; 32. if you are acquiring any New Shares as a
fiduciary or agent for one or more accounts, you have
soleinvestment discretion with respect to each such account and you
have full power to make, and do make, thewarranties and
undertakings set out herein on behalf of each such account; 33. you
acknowledge that time is of the essence as regards your obligations
in respect of your participationin the Placings; and 34. you
acknowledge that the Company, each Joint Bookrunner and any person
acting on their behalf will relyupon the truth and accuracy of and
compliance with the foregoing confirmations, representations,
warranties,undertakings and acknowledgements.
Please also note that the agreement to allot and issue Placing
Shares to Placees (or the persons for whom Placees are contracting
as agent) free of stamp duty and stamp duty reserve tax in the UK
relates only to their allotment and issue to Placees, or such
persons as they nominate as their agents, direct from the Company
for the Placing Shares in question. Each Placee agrees to indemnify
on an after-tax basis and hold each of the Joint Bookrunners and/or
the Company and their respective affiliates harmless from any and
all stamp duty, stamp duty reserve tax and all other similar duties
or taxes to the extent that such taxes, interest, fines or
penalties arise from the unreasonable default or delay of that
Placee or its agent. In addition, Placees should note that they
will be liable for any capital duty, stamp duty and all other
stamp, issue, securities, transfer, registration, documentary or
other duties or taxes (including any interest, fines or penalties
relating thereto) payable outside the UK by them or any other
person on the acquisition by them of any Placing Shares or the
agreement by them to acquire any Placing Shares.
Furthermore, each Placee agrees to indemnify and hold the
Company, each of the Joint Bookrunners and each of their and their
respective affiliates' agents, directors, officers and employees,
harmless from any and all costs, claims, liabilities and expenses
(including legal fees and expenses) arising out of or in connection
with any breach of the representations, warranties,
acknowledgements, agreements and undertakings given by the Placee
in this announcement and further agrees that the Company and each
of the Joint Bookrunners will rely on the truth and accuracy of the
confirmations, warranties, acknowledgements and undertakings in
this announcement and, if any of the foregoing is or becomes no
longer true or accurate, the Placee shall promptly notify the Joint
Bookrunners and the Company. All confirmations, warranties,
acknowledgements, agreements and undertakings given by the Placee,
pursuant to this announcement are given to each of the Joint
Bookrunners for itself and on behalf of the Company and will
survive completion of the Placing and Open Offer and/or
Admission.
Selling Restrictions
By participating in the Placings, you irrevocably acknowledge,
confirm, undertake, represent, warrant and agree (as the case may
be) with the Joint Bookrunners and the Company, the following: 35.
you are not a person who has a registered address in, or is a
resident, citizen or national of, a countryor countries, in which
it is unlawful to make or accept an offer to subscribe for Placing
Shares; 36. you have fully observed and will fully observe the
applicable laws of any relevant territory, includingcomplying with
the selling restrictions set out herein and obtaining any requisite
governmental or other consentsand you have fully observed and will
fully observe any other requisite formalities and pay any issue,
transfer orother taxes due in such territories; 37. if you are in
the United Kingdom, you are a Qualified Investor within the meaning
of Article 2(e) of theUK Prospectus Regulation: (i) who has
professional experience in matters relating to investments and who
fallswithin the definition of "investment professionals" in Article
19(5) of the Order; or (ii) who falls within Article49(2) of the
Order; 38. if you are in a member state of the EEA, you are a
Qualified Investor as defined in Article 2(e) of theEU Prospectus
Regulation; 39. you are a person whose ordinary activities involve
you (as principal or agent) acquiring, holding,managing or
disposing of investments for the purpose of your business and you
undertake that you will (as principalor agent) acquire, hold,
manage or dispose of any Placing Shares that are allocated to you
for the purposes of yourbusiness; 40. you are and, at the time the
Placing Shares are purchased, will be either:a. outside the United
States, acquiring the Placing Shares in an offshore transaction in
accordance withRegulation S; not a resident of any Excluded
Territory or a corporation, partnership or other entity
organisedunder the laws of any Excluded Territory; subscribing for
Placing Shares for your own account (or for theaccount of your
affiliates or funds managed by you or your affiliates with respect
to which you either haveinvestment discretion or which are outside
the United States); aware, and each potential beneficial owner
ofthe Placing Shares has been advised, that the sale to it of the
Placing Shares is being made in accordance withSection 4(a)(2) or
another available exemption from, or in a transaction not subject
to, registration under theSecurities Act; and either acquiring the
Placing Shares for your own account; or b. a QIB, as that term is
defined in Rule 144A, or any account for which you are acquiring
the PlacingShares is a QIB,
that makes each of the representations, warranties,
acknowledgements and agreements set out in paragraph 8 below; 41.
none of the Placing Shares have been or will be registered under
the Securities Act or with anysecurities regulatory authority of
any state or other jurisdiction of the United States; 42. that the
offer and sale of the Placing Shares is being made in reliance on
an exemption from theregistration requirements of the Securities
Act and acknowledge and agree that, for so long as the Placing
Sharesare "restricted securities" within the meaning of Rule
144(a)(3) under the Securities Act, none may be offered,sold or
pledged or otherwise transferred except in an offshore transaction
in accordance with the applicablerequirements of Regulation S or
pursuant to another applicable exemption from registration under
the Securities Actor to the Company, and in each case in accordance
with any applicable securities laws of any state of the
UnitedStates and the laws of other jurisdictions. You understand
that no representation has been made as to theavailability of any
exemption under the Securities Act for the reoffer, resale, pledge
or transfer of the PlacingShares, which may be further subject to
the applicable restrictions on transfer of the Placing Shares set
forth inthese terms and conditions in this Appendix; and 43. you
(on your behalf and on behalf of any Placee on whose behalf you are
acting) have: (a) fully observedthe laws of all relevant
jurisdictions which apply to you; (b) obtained all governmental and
other consents whichmay be required; (c) fully observed any other
requisite formalities; (d) paid or will pay any issue, transfer
orother taxes; (e) not taken any action which will or may result in
the Company or the Joint Bookrunners (or any ofthem) being in
breach of a legal or regulatory requirement of any territory in
connection with the Placings; (f)obtained all other necessary
consents and authorities required to enable you to give your
commitment to subscribefor the relevant Placing Shares; and (g) the
power and capacity to, and will, perform your obligations under
theterms contained in these terms and conditions.
Times
Unless the context otherwise requires, all references to time
are to London time. All times and dates in these terms and
conditions may be subject to amendment. The Joint Bookrunners will
notify Placees and any persons acting on behalf of the Placees of
any changes.
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ISIN: GB00B0H2K534
Category Code: IOE
TIDM: PFC
LEI Code: 2138004624W8CKCSJ177
OAM Categories: 2.2. Inside information
Sequence No.: 125164
EQS News ID: 1243445
End of Announcement EQS News Service
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