Clark Refining & Mktg Assgnd New Rtgs by S&P;Rtgs Afmd.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 11/11/97 --Standard & Poor's today assigned its double-'B' rating to Clark Refining & Marketing Inc.'s proposed $100 million floating-rate senior unsecured notes due 2004 and $125 million fixed-rate senior unsecured notes due 2007, and its single-'B'-plus rating to the company's proposed $175 million senior subordinated notes due 2007. In addition, Standard & Poor's assigned, subject to final documentation, a double-'B' bank loan rating to a potential $100 million term loan agreement that may be substituted for the floating-rate notes Floating-rate note (FRN) Note whose interest payment varies with short-term interest rates. floating-rate note An unsecured debt issue with an interest rate that is reset at specified intervals (usually every six months) according to a under substantially identical terms and conditions. The 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 of Clark Refining, and the single-'B'-plus corporate credit, 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 of parent company Clark USA Inc. were affirmed. The outlook is stable. Ratings on Clark USA, a holding company, and on Clark Refining, its operating company operating company A business that engages in transactions with outsiders. , reflect difficult conditions in the oil refining industry and an extended record of weak financial performance, partially offset by the protection of high cash balances. In 1997, financial performance has rebounded to measures more supportive of current ratings because of a combination of internal improvements and market factors. Ratings were affirmed after the acquisition earlier this month of TrizecHahn Corp.'s 65% interest by an equity fund controlled by The Blackstone Group Blackstone Group L.P. (NYSE: BX) is a prominent private equity and investment management firm founded in 1985 by Peter G. Peterson and Stephen A. Schwarzman. The company is based in New York City, in River House on Park Avenue at Fifty-first Street, with offices in Atlanta, . Clark is the sixth-largest refiner and marketer in the U.S., with one Texas Gulf Coast refinery and two Illinois refineries representing 350,000 barrels per day Barrels per day (abbreviated BPD, bbl/d, bpd, bd or b/d) is a measurement used to describe the amount of crude oil (measured in barrels) produced or consumed by an entity in one day. of overall capacity. Clark also operates 814 gas stations in 12 states, primarily in the Midwest. Chicago, Cleveland, Milwaukee, and Toledo are the company's largest markets. Like other refining companies, Clark has been unable to earn satisfactory returns on regulation-driven capital investments in the 1991-1995 period, or to pass on to customers higher crude oil costs when crude prices rise. As a result, Clark recorded low cash flow and profit margins during the period. In contrast, 1997 has been a better year for Clark, with near-maximum capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. and a widened spread between the prices of crude oil and refined products. Completion of the Express pipeline from Canada in 1997, which supplies less expensive heavy crudes to Clark's two Midwest refineries, is strengthening margins, as is management's focus on raising refinery throughput. Yet, given continued worldwide overcapacity o·ver·ca·pac·i·ty n. Too great a capacity for production of commodities or delivery of services in relation to actual need: the problem of overcapacity in many large industries. , improvement in profitability will be limited. Clark is expected to utilize a part of its current $300 million cash balance for debt reduction. The company is also expected to continue expanding its retail network by acquiring convenience stores The following is a list of convenience stores organized by geographical location. Stores are grouped by the lowest heading that contains all locales in which the brands have significant presence. in its core areas. However, sizable cash balances will be retained in accordance with management's financial policy. OUTLOOK: STABLE The stable outlook reflects expectations that improving cash flow and lower interest costs will permit financial risk measures to recover to levels supportive of the ratings. -- CreditWire CONTACT: Josh Gonze, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of (1) 212-208-1678 For more information on criteria or subscriptions: http://www.ratings.standardpoor.com |
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