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On December 18, 2020, S&P Global Ratings assigned a CCC+ issuer credit rating on BlackBrush Oil & Gas, LP. The Company recently issued a $75 million first-lien term loan after an out-of-court restructuring with its lenders in September 2020. The restructuring included the $75 million first-lien term loan due in 2025 priced at LIBOR + 500 and a 2% PIK, $225 million of preferred equity with a mandatory redemption in 2026 and a 1% PIK and 70% of the Company's common equity. Ares and management retained 30% of the common equity. The negative outlook reflects expectation of negative free cash flow generation, the Company's high debt leverage, including S&P Global Ratings' adjustments, limited access to capital markets and liquidity limited to cash on hand. Moreover, BlackBrush has a small production and reserve base and relatively high nonoperated exposure. The ratings agency assesses BlackBrush's business risk as vulnerable.
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