Fitch: MEG Energy notes BB

Fitch Ratings said it assigned a BB rating with recovery rating of RR1 to MEG Escrow Corp.'s second-lien notes.

The agency also said it affirmed MEG Energy Corp.'s long-term issuer default rating at B.

The outlook is negative.

The company announced a balance sheet recapitalization, which includes a revolver extension and reduction, an equity raise and new second-lien debt with proceeds, which will be used to repay unsecured debt.

Fitch said it views the transaction as neutral to the company's issue default rating as there will be no change in gross debt.

The negative outlook reflects the company’s lack of progress on de-leveraging its balance sheet, the agency said.

The recapitalization transactions are expected to extend the company's maturity wall by several years and fund near-term production growth, which will produce incremental high-margin cash flows, Fitch said.

The company’s ratings also reflect its adequate liquidity and manageable maturity profile, improving cost structure and long-lived asset base, the agency said.

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