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Fitch: Ultra secured debt BB+, unsecured BB
Fitch Ratings said it assigned an expected BB- first-time issuer default rating to Ultra Resources, Inc. and Ultra Petroleum Corp., subject to the company's emergence from Ch. 11.
The agency also assigned to Ultra Resources a senior secured debt rating of BB+ with recovery rating of RR1 and a senior unsecured debt rating of BB with recovery rating of RR2.
The outlook is stable.
The ratings for Ultra are based upon successful emergence from Ch. 11 as contemplated by the company’s plan of reorganization, which was confirmed March 14 and includes $2 billion of funded debt financing, Fitch said.
The closing and funding of the new debt financing and the effective date for the plan are assumed to be on or around March 31, the agency said.
Ultra has obtained a commitment letter from Barclays Bank plc, Goldman Sachs Bank USA and Bank of Montreal, Fitch said.
The banks have agreed to provide secured and unsecured financing in an aggregate amount of up to $2.4 billion, consisting of a $600 million secured first-lien reserve based term loan, $400 million secured first-lien reserve based revolving facility and unsecured debt of $1.4 billion, the agency said.
Exit financing is expected to include $580 million in proceeds from an equity rights offering.
Ultra's ratings are based on the company's low cost position and an improved capital structure and leverage forecasts following its emergence from Ch. 11, Fitch explained.
Ultra's go-forward operating cost structure will have lower gathering costs and no transportation costs until December 2019 based on a series of contract renegotiations with midstream counterparties, the agency said.
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