Believe it or not Boart Longyear (BLY), the struggling drilling company, the one with more than nine lives and escapes from near ruin in the past few years – now survives to live another year, judging by its full year report yesterday.
Embattled drilling group Boart Longyear (BLY) has bought itself another couple of years’ survival after shareholders yesterday approved the final step of $US342 million recapitalisation plan from a big US financial group.
Did we hear shouts of joy from long suffering shareholders in struggling drilling services group Boart Longyear (BLY) in the wake of a $US352 million recapitalisation plan revealed before trading on the ASX kicked off yesterday?
The company is in a difficult position, as Macquarie observes it’s navigating a weak market with a weak balance sheet. The vicious cycle looks tough to break and the broker thinks it likely that assets will have to be sold or capital raised in the next few months.
Boart Longyear has completed its debt refinancing. UBS thinks the amended debt structure is restricting the company’s ability to incur further debt and capital expenditure, but management reiterated that it does not intend to raise equity.
CIMB has retained its Underperform rating warning investors it sees further weakness ahead, even though there may be a bounce occurring this week as the company is likely to confirm it has successfully raised US$300m at a high interest cost. If confirmed, CIMB will cut estimated earnings for FY14 by no less than 21% to incorporate the high cost.
Boart Longyear has reached a revised agreement with lenders for its revolving credit facility. The amendments are dependent on the US$300m debt issue that was announced on September 12 as proceeds will be used to pay down the facility.