Boart Longyear to cut line of credit after slump in activity
The company said the change was subject to its completion of a $US300 million debt offering.
Standard and Poor's cut the company's credit rating a week ago, from B+ to B, and revised its outlook from stable to negative.
Late last month, Boart Longyear reported a June-half net loss of $329 million following a slump in drilling demand. The full-year guidance for earnings before interest, tax, depreciation and amortisation was about $US116 million.
While the management is slashing costs, the slump in drilling activity is complicating its efforts.
After speculation over the pressure from US lenders, Boart Longyear sought a trading suspension on the ASX on Friday as it looked to resolve the impasse. Its shares finished 3.5¢ lower at 45.5¢.
Several directors bought shares in the company this month around the 48¢ level.
Other companies with an exposure to the sector, such as Imdex, have forecast continued sluggish demand.
One of the difficulties for Boart Longyear is that it has a sizeable exposure to the gold sector, which accounted for 42 per cent of revenue in the June half.
The slump in gold prices has prompted miners and explorers to slash spending amid wariness over the outlook for the precious commodity after its sustained price rise in recent years.
The mining industry accounts for nearly all of Boart Longyear's operations, exposing it to the downturn in metal prices.
Frequently Asked Questions about this Article…
Boart Longyear is reducing its revolving credit facility from US$450 million (about $479m) to US$140 million as part of a refinancing move that is subject to completing a US$300 million debt offering. The change comes after a slump in drilling demand and recent financial pressure on the company.
Boart Longyear reported a June-half net loss of $329 million and gave full‑year guidance for earnings before interest, tax, depreciation and amortisation (EBITDA) of about $116 million.
Standard & Poor’s recently cut Boart Longyear’s credit rating from B+ to B and revised its outlook from stable to negative, reflecting increased credit concerns for the company.
The slump in drilling activity has complicated Boart Longyear’s cost-cutting efforts, contributed to its half-year loss and driven the company to seek changes to its financing arrangements, including the reduced credit facility and a debt offer.
Boart Longyear had a sizeable exposure to the gold sector, which accounted for 42% of revenue in the June half. Because miners and explorers have cut spending amid a slump in gold prices, that exposure has increased the company’s vulnerability to weaker demand.
Following speculation about pressure from US lenders, Boart Longyear sought a trading suspension on the ASX while resolving the funding impasse. When trading resumed, shares finished 3.5 cents lower at 45.5 cents. Several directors had also bought shares earlier in the month around the 48 cent level.
Yes. The article notes other companies with exposure to the sector, such as Imdex, have forecast continued sluggish demand, reflecting broader weakness in drilling and mining services.
Boart Longyear is slashing costs, pursuing a US$300 million debt offering and reducing the size of its revolving credit facility as part of efforts to address weaker drilling demand and its recent financial results.
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