CLL credit rating down to B
Two cuts in two months. What is going on here?
https://uk.reuters.com/article/oilRpt/idUKWNA655020090213
F eb 13 - Standard & Poor's Ratings Services today said it lowered its
long-term corporate credit rating on Calgary, Alta.-based Connacher Oil and Gas
Ltd. ( CLL.TO) two notches to 'B' from 'BB-' and its secured debt rating on
Connacher's US$600 million secured second lien notes to 'BB-' from 'BB+',
following a review of the company's current and prospective business risk and
financial risk profiles. The ratings remain on CreditWatch with negative
implications, where they were placed Dec. 15, 2008. The recovery rating of '1'
on the secured debt is unchanged.
"Our decision to lower the ratings on Connacher reflects the company's
inability to generate positive free operating cash flow at current oil prices
after servicing its large interest obligations and funding it capital program;
and concerns with the rate at which available cash and liquidity will be
depleted to sustain operations," said Standard & Poor's credit analyst Jamie
Koutsoukis. "Furthermore, with construction on the company's Algar project on
hold, and its using its available funds to support operations, it will support
existing debt with half the expected production; and Connacher's leverage is
aggressive for the 'B' rating," Ms. Koutsoukis added.
We believe that the company's business risk profile, which we assess to be
stronger than the 'B' rating, supports the rating on the company. Connacher
remains on CreditWatch as we have concerns regarding the covenants in its
existing credit facility and, specifically the requirement that its
consolidated interest coverage ratio be no less than 1.5x beginning March
2009.