Recognised as the winner in the Medium Treasury Team category was Petrofac group treasury, in light of the team’s achievements in the face of significant adversity.
The six-strong team had some major challenges to overcome in a year that saw the company beset by multiple risk factors, from a substantial fine resulting from a Serious Fraud Office investigation to higher oil price volatility due to the pandemic. Following several notch downgrades, the company’s credit rating fell to single B territory at a time when the company was facing a large maturity wall in 2022 and many lenders were indicating a reluctance to extend the facilities. A higher headcount turnover – not unexpected considering the other challenges – also contributed to the team’s difficulties.
Nevertheless, the Petrofac team was able to execute a complex refinancing project, which included a fully underwritten equity raise alongside a fully underwritten private and public debt-raising process across multiple currencies. Another key focus was the placement and management of guarantees, which are a core banking product required by the business. With a guarantees portfolio of up to $3.5bn in notional value, the team was able to place all guarantees in order to satisfy business requirements – even though the banks’ appetite to issue them for the company was severely depressed and required significant cash collaterals in some cases.
Refinancing activity required rebalancing of the balance sheet hedge portfolio, including a £200m equity raise and a £300m Covid Corporate Financing Facility that the company entered into at the beginning of 2021 and repaid at the end of the year. The team was successful in the structuring, placement and execution of all trading and hedging requirements for the group, again under highly challenging circumstances.
Cash management was another key topic for the treasury team, with the organisation focusing closely on cash preservation and prudent working capital management. While physical cash pooling was in place for many of the company’s 400-plus bank accounts, more than half were not in the pooling structure. The team successfully centralised and upstreamed its cash balances to the group, reducing the total balances across the company’s accounts by up to $200m and providing much-needed liquidity.
“The team has excelled across a mix of operational activities, while addressing some significant challenges.”