Fitch lowers Seven Energy

Fitch Ratings said it downgraded Seven Energy International Ltd.'s long-term issuer default rating to C from CC following the non-payment of a material financial obligation.

The agency also said it affirmed wholly owned subsidiary, Seven Energy Finance Ltd.'s $300 million 10¼% senior secured notes due 2021 at C with RR6 recovery rating.

The downgrades follow news that Seven Energy was unable to make payments March 31 under the $385 million Accugas facility and then requested a standstill from the lending banks, Fitch explained.

The company also did not meet the conditions for the interest capitalization under the $300 million senior secured notes and $100 million notes due 2021, the agency added, and was unable to make the related cash payment April 11.

Near-term cash flows from the company's gas business remain weak as sale volumes are volatile and the company's major gas off-takers delay payments for consumed gas, Fitch said.

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