S&P cuts Unit Corp.

S&P said it cut the ratings on Unit Corp. and its unsecured notes to CC from B-. The recovery rating is still 2.

The downgrades follow the company’s offer to exchange its 6.625% senior subordinated notes due 2021 for newly issued 10% senior secured notes due 2024 and 7% junior secured notes due 2025.

“We view the proposed exchange as distressed reflecting that participants will receive either less than the originally promised debt obligation and/or it will fall in priority relative to the existing capital structure (proposed third-lien notes),” said S&P in a press release.

Unit also is seeking consents from noteholders “to eliminate substantially all restrictive covenants,” S&P said.

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