Songa Offshore SE, a Cyprus-based offshore driller, fell the most in more than a month in Oslo as Moody’s Investors Service cut its rating on the company, citing operational setbacks and a risk of covenant breaches.
Songa dropped as much as 15 percent, the most since Nov. 15, and traded 7.1 percent weaker at 7.80 kroner as of 2:45 p.m. in the Norwegian capital. That extends the stock’s decline in the last 12 months to 54 percent, and gives the company a market value of 1.6 billion kroner ($288 million).
Moody’s downgraded Songa’s corporate family and probability of default rating to B3 from B2, citing operational problems, longer yard stays for some of its vessels and “weak covenant headroom,” the ratings company said in a statement. The cut “also considers the weak operational track record and recent departure of the CEO, combined with uncertainty” about the Limassol-based company’s strategic management, Moody’s said.
Songa, with five rigs and four on order, has struggled with higher-than-anticipated spending as it expands to meet rising demand from oil and gas producers. Its board on Oct. 24 said it began an assessment of strategic and operational issues after announcing that Chief Executive Officer Asbjoern Vavik had quit.