For offshore drilling and oil field services provider, Aban Offshore, the flow of bad news just doesn't get over.
On one hand its high debt got restructured by its Indian lenders and it got a two-year breather to repay its loans. But at the same time the lenders imposed stricter covenants to keep a check on its cash management.
And now NDTV Profit has learnt that the lenders want the management to dispose of some of the rig assets. Following this, two jack up or shallow water drilling rigs have come under the lenders scanner. And once sold these rigs are expected to fetch close to $350 million.
For Aban the situation was a lot more acute. Just two months ago when it had seven idle rigs but it manage to deploy four in Iran for $700 million and that clearly helped in improving the cash flows.
But clearly even that has not amused the lenders much who are insisting on further cutting down of assets which are still are not getting deployed.
Aban has been a favourite FII pick for the last few years when it rode the wave of high crude price. But in the recent past the company’s stock has been one of the most volatile counters because of its $200 million QIP becoming a flop show just last month.
Even though the management was unavailable for comments, the challenge say analysts will be to get a good price for the rigs as worldwide there is over supply.
"As far as asset sale is the concerned to repay debt and the fund raising exercise still does not make the stock attractive," said Gaurang Shah, AVP of Geojit BNP Paribas Financial Services.
Aban's top management is currently in the Middle East trying to find a buyer for at least one of the rigs. It has been a choppy year for them and the sooner they restructure their business the happier the ending will be for the lenders and investors.