S&P Downgrades Gulfmark Offshore (GLF) to 'CC'; Outlook Negative

November 28, 2016 4:37 PM EST

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S&P Global Ratings said that it lowered its corporate credit rating on GulfMark Offshore Inc. (NYSE: GLF) to 'CC' from 'CCC'. The rating outlook is negative.

At the same time, we lowered our issue-level rating on GulfMark Offshore's senior unsecured notes to 'CC' from 'CCC+'. The recovery rating remains '2', indicating our expectation for substantial recovery (70%-90%; lower half of the range) for debtholders in the event of a payment default.

"The downgrade follows GulfMark Offshore's announcement that it has offered to purchase up to $300 million of its 6.375% senior unsecured notes due 2022 at about 48% of par," said S&P Global Ratings' credit analyst Kevin Kwok. "We view the offer as tantamount to default because debtholders will receive less value than promised on the original securities, and the offer is distressed rather than purely opportunistic." The tender offer expires on Dec. 21, 2016, and a minimum of $250 million must be tendered for the transaction to close.

The negative outlook reflects our expectation that we would lower the corporate credit rating if the company completes the announced tender as proposed.

Once the transaction closes, we expect to lower the corporate credit rating to 'SD' (selective default) and the issue-level rating on the senior unsecured notes to 'D'. We would then reevaluate the entity under its new capital structure and consider an upgrade if we believe it is no longer pursuing distressed transactions.

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