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420man Member Level  Thursday, 05/16/19 06:46:20 PM
Re: Value_Investor post# 4390
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Just basing my opinion on personal experience, and the article below...


S&PGR Dwngrds Halcon To 'CC' On Likely Rstrctrng; Otlk Neg

12:47 pm ET May 14, 2019 (Dow Jones) Print
S&PGR Dwngrds Halcon To 'CC' On Likely Rstrctrng; Otlk Neg

(MORE TO FOLLOW) Dow Jones Newswires

May 14, 2019 12:41 ET (16:41 GMT)

Press Release: S&PGR Dwngrds Halcon To 'CC' On Likely Rstrctrng; Otlk Neg

The following is a press release from S&P Global Ratings:

-- U.S.-based oil and gas exploration and production company Halcon

Resources Corp.'s recently disclosed waiver on its maximum debt-to-EBITDA

covenant could expire as soon as July 1, 2019, and combined with its now

lowered reserve-based lending (RBL) facility is highly likely to result in the

acceleration of the company's debt maturities. We expect the company will very

likely face a payment default or undertake a distressed exchange at this time.

-- Additionally, Halcon's recently filed Form 10-Q has a going-concern

qualification, and the company has further disclosed it hired Tudor Pickering

and Holt and Perella Weinberg Partners to assist in evaluating strategic

financial alternatives.

-- We are lowering our issuer credit rating on Halcon to 'CC' from

'CCC+'. At the same time, we are lowering our issue-level rating on its

unsecured debt to 'CC' from 'CCC+'. The '4' recovery rating is unchanged,

indicating our expectation for average recovery (30%-50%; rounded estimate:

35%) in the event of a default.

-- The negative outlook reflects our expectation that Halcon is likely to

face a near-term event of default and is evaluating strategic alternatives.

NEW YORK (S&P Global Ratings) May 14, 2019-S&P Global Ratings took the rating

actions listed above. The downgrade reflects our expectation that Halcon is

likely to restructure its debt given that its recent 10-Q disclosed a

going-concern qualification, driven by a likely event of default as early as

July 1. Although Halcon has received a series of amendments providing relief

under its maximum debt to EBITDA covenant, we expect the credit facility

lender's most recent action to lower the borrowing base and only grant a

waiver, as well as the company's expectation it will not meet this covenant in

the second quarter, is highly likely to result in an event of default.

The negative rating outlook reflects our view that Halcon cannot repay its

senior RBL facility if it's accelerated on July 1 and will either pursue a

distressed exchange or face insolvency.

We could lower the rating over the next few months if Halcon pursues a

distressed exchange or files for bankruptcy.

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