April 24, 2018 / 7:13 AM / in 3 months

Petrofac to sell offshore construction vessel to Shanghai Zhenhua Heavy Industries

April 24 (Reuters) - Oilfield services provider Petrofac Ltd said on Tuesday it agreed to sell an offshore construction vessel to Shanghai Zhenhua Heavy Industries Co Ltd to reduce debt.

The deal is valued at $190 million and Petrofac will also receive a 10 percent stake in a new special purpose company set up to own the vessel once commissioned.

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

The company, which designs, builds, operates and maintains oil and gas facilities, expects to use the proceeds from the sale to reduce gross debt. Net debt stood at $612 million at the end of last year.

“We expect a positive market reaction to Petrofac’s announced asset disposal as it will help balance liquidity and reduce refinancing concerns around the October bond expiry,” Morgan Stanley analyst Robert Pulleyn wrote in a note.

Pulleyn said the deal reduces the amount they expect the company to refinance to about $250 million-$300 million, from about $400 million anticipated earlier. (Reporting by Arathy S Nair in Bengaluru; Editing by Amrutha Gayathri)

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