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Paratus Energy Services Launches Share Buyback

Paratus Energy Services Ltd., trading under the symbol PLSV on the Oslo Stock Exchange, is setting the stage for a substantial share buyback program. Announced on February 20, 2025, this program aims to repurchase approximately $20 million in shares, marking a pivotal action in the company’s financial strategy. The buyback is set to begin on February 28 and conclude by March 4, 2025. This initiative aligns with the corporate objective to utilize a greater share repurchase authorization of up to $100 million, emphasizing Paratus's commitment to returning value to shareholders.

Background for the Buyback Program

This strategic move comes on the heels of a significant cash inflow following the successful collection of $209 million in overdue invoices from a customer in Mexico, as reported on February 5, 2025. This influx has notably fortified the company's cash reserves, which now stand at approximately $277 million. Impressively, this equates to about 42% of the company's market capitalization, highlighting an enhanced liquidity position and a solid foundation for future investments.

In addition to this, at the close of January 2025, Paratus's subsidiary, Fontis Holdings Ltd., maintained a receivable balance of about $155 million with the same customer. When combined with the current cash reserves, this creates financial backing amounting to nearly two-thirds of Paratus's market capitalization, thereby reinforcing the company’s operational priorities.

The Process of the Buyback

The buyback process is strategically timed to coincide with the company's earnings release for the fourth quarter of 2024, scheduled for February 28, 2025. This timing underscores a commitment to transparency and shareholder engagement. Paratus has enlisted the services of ABG Sundal Collier ASA to ensure a smooth execution of the buyback, providing an avenue for shareholders interested in participating. They will be able to tender their shares at prices determined by their own selling preferences, further enhancing the buyback's attractiveness.

Importantly, the two largest shareholders, Hemen Investments Ltd. and Lodbrok Capital LLP, representing funds and accounts that they manage or consult, have indicated that they do not plan to participate in this buyback. This decision highlights a diversified approach among the shareholder base, which could potentially open up opportunities for new investors to engage with the company.

Future Considerations

Paratus Energy Services is steadfast in its focus on maintaining a robust balance sheet while delivering sustainable returns to its shareholders. Plans for additional future repurchases will depend on market conditions and company performance, ensuring that any further initiatives will be communicated clearly to shareholders.

In conclusion, the commencement of this buyback program signals a notable shift in Paratus Energy's focus towards enhancing shareholder value. It not only showcases the company’s confidence in its financial health but also establishes a framework for sustained growth and investment in the energy sector. As the buyback implementation unfolds, all eyes will be on Paratus Energy to see how this strategic decision impacts both its market positioning and shareholder sentiment moving forward.