The Petrofac (LON:PFC) share price crashes as it raises $275m

The Petrofac share price has slumped after announcing a discounted share sale to fund its settlement with the Serious Fraud Office.

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Shares in oil and gas services firm Petrofac (LSE: PFC) are down by more than 15%, as I write, this morning, after the company announced a $275m fundraising. Petrofac’s share price is now unchanged over 12 months, but remains 85% lower than it was five years ago.

Petrofac stock soared at the end of September when the company announced it would pay a £77m penalty to settle a bribery investigation brought by the Serious Fraud Office (SFO).

Today, we’ve learned how the company plans to pay the fine. Petrofac will sell $275m of new shares at 115p per share — a discount of 27% to yesterday’s closing price. This cash will be used to pay the SFO penalty and clear the group’s existing debts. Today’s share price fall reflects the expected dilution from this discounted fundraising.

Rebuilding the business

Petrofac also released its half-year results today. These show revenue fell to $1,595m during the period, compared to $2,103m during H1 last year. Losses for the half-year rose to $86m, compared to $78m last year.

Like most rivals, the group’s performance was affected by last year’s oil market crash. But Petrofac has also faced difficulty winning new work in Middle Eastern countries, affected by the SFO bribery investigation.

Now that this issue has been resolved, chief executive Sami Iskander hopes to move forward. He plans to expand Petrofac’s business in Russia and has signed a new five-year deal with Russian oil and gas giant Gazprom.

Alongside this, Petrofac hopes to generate 20% of its revenue from renewable energy over the medium term.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Roland Head has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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