Why Offshore Drilling Stocks Are Sinking Today
Shares of companies focused on the offshore drilling industry are plunging today. Leading the downdraft was Diamond Offshore Drilling (NYSE: DO), which plummeted 38% by 2:30 p.m. EDT on Thursday. Weighing on the company was its decision not to make an interest payment on its debt. That news sent other offshore-drilling-related stocks lower, with both Transocean (NYSE: RIG) and Oceaneering International (NYSE: OII) falling more than 10% at one point in the day.
According to a filing with the Securities and Exchange Commission, Diamond Offshore Drilling has elected not to make the semiannual interest payment on its 5.7% senior notes due in 2039. While that payment was due Wednesday, it does have a 30-day grace period. If Diamond Offshore doesn't make an interest payment by May 15, then it will be in default.
That would then trigger a cross-default of the company's bank credit facility as well as its other outstanding notes. The company has retained legal and financial advisers, which are evaluating options. Among those they're likely considering is whether to restructure Diamond Offshore's debt in bankruptcy.
Source Fool.com
