S&P: Tom Brown unaffected by sale

Standard & Poor's said Thursday that the ratings and outlook on Tom Brown Inc. (BB+/stable/--) are not affected by its announcement that it is evaluating the sale of its wholly owned drilling subsidiary, Sauer Drilling Co.

S&P said that although positive, the potential proceeds from the sale should not have a material affect on Tom Brown's liquidity or earnings, as the subsidiary is small relative to Tom Brown's remaining operations (the 1998 acquisition of Sauer and subsequent rig purchases have totaled roughly $12 million versus the Dec. 31, 2003 total of Tom Brown assets of $1.6 billion).

The sale will create greater exposure to the volatile drilling rig market; however, the onshore rig market still remains mired with excess capacity, which should minimize the near-term risks to Tom Brown's cost structure. Proceeds from the sale will likely be applied to debt repayment or to fund capital expenditures.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.