S&P cuts Key Energy debt to B-

Standard & Poor's said it lowered its corporate credit rating and senior unsecured debt rating on Key Energy Services Inc. to B- from B.

S&P also revised the CreditWatch implications on the company to negative from developing.

The rating actions follow the company's recent announcement that it will not be able to deliver its audited 2003 financial statements and the unaudited financial statements for the first three quarters of 2004 by the March 31 filing deadline set forth under the terms of the company's senior credit agreement and consent with the holders of the company's 6 3/8% senior notes due 2013 and 8 3/8% senior notes due 2008, according to S&P.

As a result, the company is in the process of seeking additional waivers from the lenders under its senior credit facility and additional consent from its noteholders to extend the March 31 deadline.

Of additional concern, according to S&P, is the company's failure to file its 2003 form 10-K by March 31, which will also likely result in the NYSE to begin the delisting process for Key Energy's common shares on March 31.

S&P said the suspension in trading of Key Energy's shares on the NYSE shortly thereafter will further constrain the company's liquidity by not having access to the public equity markets.

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