Sabine Oil & Gas announced in an 8-K form filing on Wednesday that it has borrowed the remaining $356 million left under its $1 billion revolving credit facility.

In addition, the company announced it has received a notice of default from lenders with respect to its 7.25% senior notes due 2019 alleging that the company’s transaction with Forest Oil constitutes a change of control.

The Forest Oil7.25% senior notes due 2019 were largely unchanged, with trades reported in small clips around the 32 context.

Forest Oil and Sabine Oil & Gas closed the all-stock merger with revisions in December so that the change-of-control put no longer applied to the Forest bonds, therefore eliminating the need to repay the debt at the 101 provision (see “Forest/Sabine revised merger closes; bridge not needed; bonds plunge ,” LCD News, Dec. 16, 2014).

In connection with the merger, the existing Sabine and Forest revolving credit agreements were refinanced with a new $1 billion reserve-based revolver. In addition, the company said it expects to incur an additional $50 million of second-lien term loans under its existing second-lien term loan facility in connection with the closing.

S&P in January revised its rating outlook on Sabine Oil & Gas to negative and affirmed its B corporate credit rating and CCC rating on the company’s senior unsecured notes. Moody’s rates Sabine Oil & Gas B3 with stable outlook.

Sabine Oil & Gas now trades under the ticker symbol SOCG. – Rachelle Kakouris

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Oil and gas company BPZ Resources has failed to pay $62 million owed to creditors at maturity as it looks to thrash out a restructuring of some $230 million of debt and negotiate alternative financing solutions.

The Houston-based company had sought to refinance the said notes – a 6.5% convertible issue due March 1, 2015 – with a $150 million offering of secured notes in October – but failed to get the deal over the finish line as conditions in the funding markets worsened for credits in the energy sector.

BPZ now has a 10-day window in which to make the $60 million payment and a 30-day grace period on $2 million in interest due, bringing the total amount of $62 million, the company said.

If BPZ fails to make the payment on the 2015 notes within the given grace period, the company would also be in default of its 2017 convertible bond issue, placing all of its $229 million of convertible bonds in default.

BPZ could therefore be forced to seek Chapter 11 bankruptcy protection.

As reported, BPZ hired Houlihan Lokey and Stroock in December to address its liquidity and capital structure.

Standard & Poor’s, which rates the company CCC+ with developing outlook, considers BPZ’s liquidity to be “less than adequate,” and warned in an October note that it may lower its rating if the company is unable to secure additional liquidity sources to fund its “aggressive capital spending plans.” – Rachelle Kakouris

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Gun-maker Colt Defense, Arch Coal and high-tech security concern Altegrity recently joined S&P Capital IQ/LCD’s Restructuring Watchlist, which tracks companies with recent credit defaults or downgrades into junk territory, issuers with debt trading at deeply distressed levels, as well as those that have recently hired restructuring advisers or entered into creditor negotiations.

Colt Defense . the 160 year-old gun manufacturing icon, joined the list as its bonds fell eight points last week after the company missed Street expectations for second-quarter results, according to LCD’s Matt Fuller. Management cited lower commercial and law enforcement rifle sales, as well as lower sales to the U.S. government. In the second-quarter report Colt said that, if not for an amendment, it would have been in violation of covenants as of June 29, and warned it may also be in default on a term loan at the end of the year.

Arch Coal  joined the Watchlist last week as it saw its bonds fall more than four points, to a record low near 60, writes LCD’s Rachelle Kakouris. This followed a report by Nomura cautioning that fundamentals for the U.S. thermal coal market could deteriorate in 2015. The Nomura report was particularly bearish on Powder River Basin coal producers, of which Arch is second-largest.  (Of all those cited in the Nomura report, the hardest hit was Walter Energy. whose debt dropped nearly six points and whose name has already been on the Watchlist for weeks.)

Altegrity  provides information, security, training, investigations, analytics, and technology services to governmental and commercial clients. It will be providing less of that in the near future, however, with the announcement that it has lost two government contracts, according to Kakouris. This prompted a downgrade of its credit rating by Moody’s, and further prompted a move onto LCD’s Restructuring Watchlist.

Moving off the Watchlist was RAAM Global Energy . Despite troubled times for many energy credits, RAAM managed to clear itself off the list with a leveraged loan deal which refinanced its revolver maturing July 1, 2015.

Contact Marc Auerbach  for questions on the Watchlist or LCD Research.

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Deluxe Entertainment Services Group andEndeavour International   this week  joined  LCDs Restructuring Watchlist, which tracks companies with recent credit defaults or downgrades into junk territory, issuers with debt trading at deeply distressed levels, as well as those that have recently hired restructuring advisers or entered into creditor negotiations.

Deluxe Entertainment saw S&P cut the company’s credit rating three notches, to CCC from B, in late August. Trading at 95/97 prior to the downgrade, the term loan fell dramatically, to 87/89. S&P said it expects the company will violate its total-net-leverage covenant as early as Sept. 30 unless it receives an equity cure from its private equity owner or gets an amendment.

“If the company is unable to obtain an equity cure or if it uses an equity cure in consecutive quarters, we would likely lower the rating to CCC-,” S&P credit analyst Peter Bourdon wrote in the August downgrade report.

S&P went on to cite various factors that left the company’s operating performance below expectations, as detailed in LCD’s Sept. 2 story. Deluxe, which is controlled by MacAndrews & Forbes, provides digital asset creation, management, and distribution services.

Endeavour International bonds traded lower in the first week of September after the company elected to skip interest payments due to bondholders on Aug. 30 and Sept. 1. This triggered restructuring negotiations for the typical 30-day grace period. It also resulted in S&P lowering credit ratings to D late on Sept. 5, from CCC. Endeavour’s first- and second-lien bond ratings were also cut to D, from CCC- and CC, respectively.

However, as noted in LCD’s Sept. 8 story,  S&P at the same time raised recovery ratings on the debt. These positive expectations for the oil and gas exploration business were due to an updated higher valuation of the companys reserves.  

Shown below, in its entirety, is LCDs Restructuring Watchlist, as of Sept. 5, 2014.