Corporate bond markets may be open, but not every company is willing to accept the cost of doing business.
Precision Drilling Trust decided Thursday to cancel a planned $250-million (U.S.) bond offering, according to Reuters. This financing was part of the oil field services company's push to rework its balance sheet in the wake of last year's $2-billion acquisition of rival Grey Wolf. The new debt, with a 10-year-term, was meant to replace short-term bank loans.
Precision Drilling balked at the prospect of paying something in the neighbourhood of 12 to 14 per cent interest on the new 10-year bonds. The company did sell $172-million of equity last week.
On trading desks, Precision Drilling it referred to as the second coming of Teck – a company that's going to underperform until it works its way out from under debt acquired in a poorly-timed acquisition.
