Shares in Petroleum Geo-Services fell by 9.2 percent yesterday to a nine year low after the Norwegian oil services company said that it has not completed the sale of its Atlantis natural gas unit to China National Chemicals Import and Export Corp., or Sinochem.
PGS stock slid by 3.4 kroner to 33.5, the lowest level since March 1993. The stock has slumped by thirty seven percent since May 2nd, when the company said the planned $215 million sale was further delayed.
Failure to complete the sale of Atlantis to Sinochem may impede a planned merger between PGS and the rival Veritas DGC and would lead to a credit rating downgrade of at least one notch for the firm, Moody's Investors Service has said, thus pushing up the cost of servicing debt. PGS's unsecured debt is currently rated “Baa3,” the lowest investment-grade rating.
“The possibility of an immediate downgrade of PGS's credit rating to junk bond status is now more likely than ever,” said Aasulv Tveitereid, an analyst at Enskilda Securities, in a note to investors.