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16 Mar 2009
Approximately USD1.625 billion of Long-Term Debt Affected
London, 16 March 2009 -- Moody's Investors Service has today downgraded to B2 from B1 the
corporate family rating and probability of default rating of Turbo Beta
Ltd (consolidated with its subsidiaries, "Abbot"), the ultimate
holding company for drilling contractor Abbot Group Ltd. At the
same time, Moody's downgraded to B1 from Ba3 the rating on
the USD1.625 billion Senior Facilities raised by Turbo Alpha Ltd,
the immediate holding company of Abbot Group Ltd. LGD assessment
remains unchanged at LGD3 (34%). The ratings have been placed
on review for further possible downgrade.
The rating downgrades are prompted by Moody's view that, given
the growing likelihood of a substantial and potentially prolonged downturn
in demand for drilling and oilfield services, Abbot will be unable
to reduce its leverage (expressed as net debt to EBITDA, as adjusted
by Moody's) over the short- to medium-term at or below
4.5x in order to maintain the B1 corporate family and Ba3 senior
secured ratings. This target ratio compares with an estimated leverage
of around 6x at year-end 2008, which is slightly above Moody's
expectations at the time ratings were assigned.
The review will focus on the following issues: (i) the degree to
which declining utilization and weakening pricing across the industry
is likely to affect Abbot's medium-term drilling contracts
hence the visibility over its cash flows, (ii) the group's
ability to cut operating and capital expenditures so as to generate positive
free-cash flows in the current environment, (iii) its headroom
against covenants, and (iv) the potential support that could be
offered by its shareholder. Moody's expects to conclude the
review within one month.
The principal methodology used in rating Abbot was the Global Oilfield
Services Industry Methodology, December 2006, which can be
found at www.moodys.com in the Credit Policy & Methodologies
directory, in the Ratings Methodologies subdirectory. Other
methodologies and factors that may have been considered in the process
of rating this issuer can also be found in the Credit Policy & Methodologies
directory.
Moody's last rating action on Abbot was on 15 April 2008, when the
rating agency assigned for the first time a B1 corporate family rating
with stable outlook to Turbo Beta Ltd and a Ba3 rating with stable outlook
to the Senior Facilities raised by Turbo Alpha Ltd.
Headquartered in Aberdeen, UK, Abbot Group Ltd is a provider
of onshore and offshore drilling services to both IOCs and NOCs in the
Eastern Hemisphere. Its ultimate owner is First Reserve Corporation,
a US private equity firm specialised in the energy industry. In
2008, Abbot reported revenues of around USD1.9 billion.
London
David G. Staples
Managing Director
Corporate Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
London
Paul Marty
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's downgrades Abbot and places ratings on review for further downgrade
No Related Data.
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