Tough Times For PGS
Petroleum Geo-Services shares fell 5.5 percent in Oslo, dropping a second day after a planned merger with Veritas DGC collapsed and its ratings were cut by Standard & Poor's and Moody's Investors Service.
The shares fell 0.29 krone to close at a record low of 4.96 kroner in Oslo, after slumping by 68 percent the previous day. The company's American depositary receipts rose 7.1 percent to 60 cents at 10:02 a.m. New York time. PGS, once valued at almost 30 billion kroner ($3.9 billion), is now worth 513 million kroner.
S&P reduced the oilfield services company's debt to junk, shaving off three rating levels to BB-, which raises borrowing costs. Moody's, which cut PGS to below investment grade a month ago, lowered its rating by another two levels to Ba3. Both ratings companies said that they have a negative outlook on PGS.
PGS has about $930 million in debt due in the second half of next year, which it won't be able to pay back with cash from operations, the company has said. PGS needs to reorganize its debt, sell assets and new shares, and change its management to stay afloat, analysts have said.
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