Fitch lowers Geo Energy Resources

Fitch Ratings said it downgraded Geo Energy Resources Ltd. to C from CC. The agency also downgraded the rating on subsidiary Geo Coal International Pte. Ltd.'s senior unsecured guaranteed notes to C, from CC, with a recovery rating of RR4.

“The downgrade follows Geo's tender offer and consent solicitation to change the protective covenant of its U.S. dollar notes due 2022, which Fitch considers to be a distressed debt exchange (DDE) under its criteria,” Fitch said in a press release.

The company is offering $430 in cash for each $1,000 of notes tendered before June 4. For notes tendered after but before t June 18, Geo is offering $400 for each $1,000 of notes. The company will also pay accrued interest on the notes, the agency said.

“Fitch believes Geo made the exchange offer for the 2022 notes to avoid payment default in May 2021, given its tight liquidity. Geo reported around $80 million in cash at end-April 2020, against the outstanding U.S. dollar notes of around $154 million. The company's operating profile has weakened significantly, with a minimal safety margin for operations amid weak coal prices and falling reserves,” Fitch said.

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