Shares of Borr Drilling (BORR 2.76%) slumped by as much as 13.6% on Wednesday morning, and were still down by about 8.7% as of 11:51 a.m. EST. Weighing on the oil stock was a Norwegian newspaper report that two of its creditors were discussing potential alternative plans.
In late December, Borr Drilling updated investors on its plans, stating that it was actively working with creditors to shore up its liquidity. At the time, it said it had "considerable support of all secured creditors" for a liquidity improvement plan of around $925 million over the next two years. The proposed agreement would defer several of Borr's upcoming debt maturities until 2023 if it can raise $40 million by selling new equity.
The company had hoped to close the equity issuance and lender support agreements by the end of January. However, a Norwegian newspaper report suggests that at least two lenders might not be on board with this plan, as they're discussing potential alternative solutions. If the original deal falls through, a major Norwegian bank and British fund have reportedly mulled taking over, splitting up, or selling Borr Drilling.
Borr Drilling has been teetering on the brink of bankruptcy in the wake of last year's crash in crude oil prices. While the company believes it has a plan to make it through this downturn intact, some of its creditors appear to have other ideas. Given the offshore drilling company's precarious financial position, investors should steer clear of this oil stock.