Boart Longyear Ltd. Outlook Revised To Stable, #CCC+# Rating Debt Ratings Affirmed

Stocks and Financial Services Press Releases Thursday July 14, 2016 08:43
NEW YORK--14 Jul--S&P Global Ratings

NEW YORK (S&P Global Ratings) July 13, 2016--S&P Global Ratings said today itrevised its rating outlook on Boart Longyear Ltd. to stable from negative andaffirmed its 'CCC+' corporate credit rating on the company.

We also affirmed our 'B' issue-level rating on the company's senior securednotes due 2018, with a recovery rating of '1', indicating our expectation forvery high (90% to 100%) recovery in the event of payment default. At the sametime, we affirmed our 'CCC+' issue-level rating on the company's senior

unsecured notes due 2021, with a recovery rating of '4', indicating ourexpectation for average (lower half of the 30% to 50% range) recovery in theevent of payment default.

"The stable outlook reflects our view that Boart Longyear's EBITDA will remainlow, about $20 million to $30 million in 2016, increasing to $35 million to$45 million in 2017, and its leverage very high, above 30x in 2016, decreasingto about 20x in 2017, because stubbornly weak prices for many metals havedepressed investment by mining companies," said S&P Global Ratings creditanalyst Patricia Mendonca. "It also reflects our view that the company willmaintain adequate liquidity over this period."

We could lower our ratings if conditions worsen and the company experiencessignificant cash burn over the next 12 months, finding itself in the positionof having to fund operating losses and debt services with available cash andABL borrowings. As a result, we would likely consider liquidity to be lessthan adequate, which would weigh negatively on the rating and outlook.

An upgrade is unlikely over the next 12 months given our expectation thatalthough metal prices have been improving since the beginning of the year, itwill take the mining companies an additional six to 12 months to startcommitting capital to exploration and development projects. We could raise ourratings, though, if leverage comes down to below 10x and EBITDA interestcoverage is at least 1.25x for a sustained period.


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