Clark USA Ratings Affirmed by S&P After Announcement.

NEW YORK--(BUSINESS WIRE)--S&P CreditWire 11/5/97--Standard & Poor's today affirmed its single-`B'-plus corporate credit and senior unsecured debt and preferred stock ratings of Clark USA Inc., and its double-`B' corporate credit and senior unsecured debt ratings of Clark Refining & Marketing Inc.

The ratings outlook remains stable.

About $750 million in rated debt securities are affected.

The affirmations follow the announcement that an equity investment fund has acquired TrizecHahn Corp.'s 65% controlling interest for $135 million in cash.

The change in ownership to the investment fund, which is controlled by The Blackstone Group, ends the previously announced plan for a public spin-off of the Clark shares, but is expected to have a neutral impact on credit risk. Blackstone is supportive of efforts to reduce Clark's exposure to refining risks, which may include entering an alliance or partnership arrangement for Clark's refinery in Port Arthur, Texas. Importantly, financial policy is expected to remain unchanged, including Clark's long-standing commitment to maintaining a large cash balance in the $150 million-$200 million range. Clark is expected to proceed with its previously announced plan to refinance portions of its long-term debt to reduce interest expense and extend maturities.

Ratings on Clark USA, a holding company, and on Clark Refining, its operating company, 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 better market conditions.

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 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 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 domestic overcapacity, 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 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, 212/208-1678

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