Boart Longyear to cut line of credit after slump in activity
The world's largest drilling company, Boart Longyear, says it will reduce the size of its revolving credit facility from $US450 million ($479 million) to $US140 million.
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.