Clark Refining & Marketing Inc. Rtgs Afmd, Off S&P Watch Clark Refining & Marketing Inc.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 7/16/98-- Standard & Poor's today affirmed its double-'B' corporate credit and senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. ratings and single-'B'-plus subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". rating on Clark Refining & Marketing Inc. In addition, Standard & Poor's affirmed its double-'B' corporate credit rating and single-'B'-plus senior unsecured debt and preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. ratings on Clark USA Inc. Standard & Poor's removed all ratings from CreditWatch, where they were placed July 7, 1998. The outlook is stable. The CreditWatch placement followed the announcement of Clark's proposed debt-financed acquisition of British Petroleum's Lima, Ohio Lima (IPA pronunciation: [laɪmə]) is a city in the U.S. state of Ohio and the county seat of Allen CountyGR6. oil refinery for $235 million. Rated securities total about $575 million at Clark Refining and $240 million at Clark USA, the parent holding company. The affirmation reflects Standard & Poor's view that operating synergies and modestly improved pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma credit protection measures effectively offset any additional risks posed. Those additional risks include the higher debt burden and the loss of any benefits the refinery may currently have as a result of operating under British Petroleum ownership. In addition, Standard & Poor's concluded that Clark likely will restrict its capital investments in the refinery to modest levels and still generate net profits. However, the refinery is due for a major turnaround in 1999 that will likely absorb most of 1999 cash flow after interest expense on the acquisition debt. The Lima refinery is a large facility equipped to refine primarily light sweet (i.e. higher priced) crude oil and produce a relatively high value product slate. The refinery is well located to supply Clark's Ohio retail outlets retail outlet n → punto de venta retail outlet n → point m de vente retail outlet retail n → , which will in turn free Clark's two smaller refineries in the Chicago area to supply more of the company's distribution network in other Midwestern states. As a result, overall profit margins should benefit from lower costs to transport refined products. Refining industry conditions remain difficult, particularly for Midwest and East Coast refiners, which must compete with imports and Gulf Coast refineries that ship product northward north·ward adv. & adj. Toward, to, or in the north. n. A northern direction, point, or region. north by pipelines. Industrywide in·dus·try·wide adv. & adj. Throughout an entire industry: sales that have decreased industrywide; industrywide cooperation. and company-specific refining margins are volatile, but are considered weak on average. A key element of Clark's financial policy is to maintain large cash balances of $150 million-$200 million. The resulting liquidity gives Clark the ability to operate through periods of scarce profits, when access to banks and capital markets may be limited. Ratings also reflect an expectation that credit measures will slowly improve as management controls costs, optimizes operation of the company's assets, and directs capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. toward projects with financial paybacks. OUTLOOK: STABLE Clark's outlook reflects Standard & Poor's expectation that competitive conditions for independent refinerers should not worsen. High cash balances and generally improving results support the rating, Standard & Poor's said.---CreditWire
CONTACT: Josh Gonze, 212/208-1678
For more information on criteria or subscriptions:
http://www.ratings.standardpoor.com
|
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion