26th Jun 2014 10:57
LONDON (Alliance News) - Petrofac PLC said Thursday it has signed a USD1.25 billion energy infrastructure agreement with First Reserve to create a new business to deploy capital in purchasing new and existing energy projects.
The services provider to the oil and gas industry said the new business, to be known as PetroFirst Infrastructure Partners, will be created to deploy capital both in purchasing a number of existing assets from Petrofac's Integrated Energy Services division, as well as in new energy infrastructure projects that utilise Petrofac's development capability.
Shares in FTSE 100-listed Petrofac rose following the announcement of the deal, trading 2.08% higher at 1,223 pence per share Thursday morning.
Petrofac said the deal reinforces the positioning of its IES division as an "enabler for the Petrofac group, providing a route to market for its core areas of strength, offering clear synergies with ECOM and enhances capital discipline."
First Reserve is an energy-focused infrastructure investment firm.
Under the terms of the agreement, the first transaction will be First Reserve's purchase of 80% of Petrofac's deployed and contracted floating production facilities for a total initial consideration of approximately USD450 million. Petrofac and First Reserve will establish a joint venture in respect of three of Petrofac's floating production facilities. Petrofac has agreed to sell 80% of the share capital of Petrofac FPSO Holding Ltd to PetroFirst Infrastructure Holdings Limited, wholly owned by the First Reserve Energy Infrastructure Fund I.
Petrofac FPSO Holding Ltd will retain a put option so that Petrofac may be required to repurchase one or more of the facilities or their holding companies for agreed aggregate consideration of between USD39 million and USD105 million at the end of their deployment or at certain other key junctures, said the company.
The new business is anticipated to be funded 80% by First Reserve and its investors, with Petrofac retaining the balance of ownership and expecting to contribute up to a maximum of USD250 million in the form of existing assets and cash. Up to USD1 billion is expected to be committed by the First Reserve Energy Infrastructure Funds and its investors.
Petrofac said the gross investment capacity of the new venture is expected to be significantly increased through debt leverage available to infrastructure investments.
"As recently stated, we have re-focused our IES business development plans and this innovative venture reinforces the positioning of IES as an enabler for the Petrofac group, allowing us to concentrate our resources on our core strengths and underlining our commitment to capital discipline," said Petrofac Group Chief Executive Ayman Asfari.
By Alice Attwood; [email protected]; @AliceAtAlliance
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