S&P rates Gulf Offshore notes CCC+

Standard & Poor's said it assigned a preliminary CCC+ corporate credit rating to Gulf Offshore Logistics Holdings LLC and a preliminary CCC+ issue rating to the proposed $110 million of senior secured notes due 2016. S&P also assigned a preliminary 3 recovery rating to the notes, indicating expectations of meaningful (50% to 70%) recovery.

The outlook is developing.

The company will use proceeds from the transaction to repay outstanding debt and to fund acquisitions and working capital.

The outlook is developing because S&P could raise or lower the ratings depending on whether Gulf Offshore procures a new undrawn $30 million revolving credit facility in the near term, the agency said.

The ratings reflect the company's position as a participant in the highly cyclical and competitive offshore marine services segment of the oilfield services sector, small size and scale, limited geographic diversity with a majority of vessels in the Gulf of Mexico, concentrated customer base, low barriers to entry in the company's business space and its less than adequate liquidity, the agency said.

The ratings also reflect Gulf Offshore's younger-than-average fleet that permits the company to obtain higher day rates, long-term contracting of a majority of its fleet and minimal non-acquisition capital expenditure requirements, the agency said.

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