Harvey Gulf affirmed at CCC+ by S&P Global Ratings on weak credit measures

HGIM Corp, doing business as Harvey Gulf International Marine LLC, was affirmed on Jan. 6 by S&P Global Ratings at CCC+ and a negative outlook, with the agency citing weak credit measures and liquidity concerns. At the same time, Ratings lifted the issue rating on the company's $322 million (outstanding) term loan due August 2023 (L+600, 1% Libor floor) to CCC+ from D, where it had been since being downgraded in January 2021 following below-par tender offers.

S&P Global Ratings said that although it believes offshore oil and gas activity will "modestly improve" this year, it projects Harvey Gulf's credit measures will "remain weak," with leverage in 2022 of about 5.25-5.50x. The agency expects that both EBITDA margins and fleet utilization will continue improving this year, trends that began in 2021.

Ratings believes the company's liquidity is less than adequate, expressing concern about Harvey's ability to refinance its term loan ahead of its 2023 maturity given a current cash balance of $61 million and Ratings' projections of "modest" 2022 free operating cash flow of about $15 million. The rating agency said it lifted the term loan to CCC+, from D, because it doesn't expect the company to initiate additional tender offers "in the near term."

New Orleans-based HGIM is an offshore oil field services provider specializing in offshore support vessels and multipurpose supply vessels for deepwater oil and gas operations primarily in the U.S. Gulf of Mexico.