Moody's rates SESI loan Ba3

Moody's Investors Service said it assigned a Ba3 rating with a loss-give-default assessment of LGD3 (43%) to SESI, LLC's new $200 million seven-year senior secured term loan facility, which will guaranteed by Superior Energy Services, Inc. and substantially all of its current and future domestic subsidiaries.

The agency also affirmed SESI's Ba3 corporate family and probability-of-default ratings, affirmed the B1 rating on the company's guaranteed senior unsecured notes and changed the notes' loss-given-default assessment to LGD 5 (71%) from LGD 4 (63%).

The outlook remains negative.

Proceeds from the term loan will be used to finance 55% of the cost of Superior's acquisition of Warrior Energy Services Corp., for which Superior will pay $175 million in cash and 5.3 million shares of common stock.

The agency said the negative outlook reflects Superior's increasingly aggressive growth strategy, which could result in higher sustained financial leverage than recent historical levels and may require the greater flexibility of a lower debt rating.

The affirmation reflects the use of common equity to fund a meaningful portion of the Warrior acquisition, the strategic benefits of the acquisition - including greater geographic diversification and an enhanced market position in cased hole wireline and snubbing, Warrior's focus on production-related services and on providing services that require a high level of technical expertise - and the fact that the anticipated increase in leverage as a result of the transaction remains in a range appropriate for the Ba3 corporate family rating, Moody' said.

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