S&P slashes Superior Energy

S&P said it cut the ratings for Superior Energy Services Inc. and its notes maturing in 2021 to CC from B-. The 3 recovery rating on the notes due 2021 and the B- issue-level rating on Superior’s notes maturing in 2024 remain unchanged. The outlook is negative.

Superior announced the divestiture of certain of its U.S. land service lines, which it will combine with Forbes Energy Services to form a new, publicly traded company.

Superior also announced it plans to exchange up to $500 million of its $800 million 7 1/8% senior notes due 2021 for up to $500 million of newly issued second-lien notes. Concurrent with the Forbes merger, the new company will offer $250 million of senior secured second-lien notes while Superior will issue up to $250 million of senior secured second-lien notes.

Once the transaction closes, S&P said it expects to lower the issuer credit rating on Superior to SD and the issue-level rating on its notes maturing in 2021 to D.

“After the transaction, we will reassess our ratings on Superior based on its new capital structure and would consider an upgrade if we are certain the company will no longer pursue a distressed exchange,” said S&P in a press release.

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