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Published on 5/25/2021 in the Prospect News Bank Loan Daily, Prospect News Distressed Debt Daily and Prospect News High Yield Daily.

S&P puts W&T 9¾% notes on watch

S&P said it placed the ratings on W&T Offshore Inc.’s senior secured debt and 9¾% second-lien notes due 2023 on CreditWatch with negative implications.

The placement follows W&T’s plan to sell its Mobile Bay assets to a wholly owned special purpose vehicle for net cash proceeds from a $215 million first-lien nonrecourse term loan issued by the SPV.

The asset sale removes about 55% of proved reserves from the collateral pool supporting the second-lien notes, the SPV will have a first lien on those assets. “Given the significant reduction in collateral and expected negative impact to our recovery estimate available to support the non-SPV debt, we have placed the senior secured ratings on CreditWatch with negative implications given the possibility of a reduction in recovery and resulting rating,” the agency said.

“The CreditWatch placement reflects the potential to lower the ratings pending an analysis once we know the borrowing base on W&T's reserve base lending facility (RBL) and receive an updated reserve valuation based on our recovery assumptions,” S&P said.

The outlook is negative.


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