S&P cuts Connacher Oil to D

Standard & Poor’s said it lowered its long-term corporate credit rating and debt issue ratings on Connacher Oil and Gas Ltd. to D from CC following the company’s announcement of its proposed recapitalization, in which the company intends to exchange its existing C$350 million and $550 million senior secured second-lien debt (plus accrued interest) for equity.

The dramatic reduction in crude oil prices since June 2014 caused a rapid deterioration in Connacher’s liquidity position, such that the company will be unable to fund both its debt servicing obligations and minimum maintenance capital spending requirements, the agency said.

“Our decision to lower the ratings to D is consistent with our criteria, which view the proposed recapitalization that will exchange the company’s existing C$350 million and $550 million second-lien debt and accrued interest to Feb. 1, 2015 into equity, as an event of default,” said S&P credit analyst Michelle Dathorne in a news release.

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