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S&P lowers Hercules Offshore
Standard & Poor’s said it lowered its corporate credit rating on Hercules Offshore Inc. to CCC- from CCC+. The outlook is negative.
At the same time, S&P lowered the issue-level rating on the company’s secured debt to CCC- from CCC+. The recovery rating on the debt issue remains 3, indicating an expectation of meaningful (30% to 50%, higher end of the range) recovery in the event of a payment default.
“The rating action follows the company’s disclosure that it has entered into a forbearance agreement with its lenders, and our belief that there is a high likelihood of default or restructuring over the next six months,” said S&P credit analyst Kevin Kwok in a news release.
“During the forbearance period, the company will be unable to access the $200 million in escrow related to the final payment on the Hercules Highlander rig, which could potentially delay delivery of the new build and impact the company’s contract for this rig.”
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