S&P ups Forum Energy, rates notes CCC+

S&P said it upgraded Forum Energy Technologies Inc.’s issuer rating to CCC+ from SD and assigned a CCC+ rating to the company’s new 9% convertible secured notes due 2025. The 4 recovery rating indicates the agency’s expectation for average (30%-50%; rounded estimate: 30%) recovery of principal in the event of a default.

Concurrently, S&P raised the rating on Forum’s senior unsecured debt to CCC- from D and revised the recovery rating to 6 from 4, which indicates our expectation for negligible (0%-10%; rounded estimate: 0%) recovery of principal in the event of a default.

“Our CCC+ rating reflects the company's unsustainable leverage. Although the debt exchange resolved issues around the need for a debt refinancing in 2021, overall debt levels are unchanged and leverage metrics remain weak. The company's previous cash tender for debt at below-par, which was completed in May 2020, reduced net debt outstanding by about $35 million,” S&P said in a press release.

The outlook is negative.

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