TEXT - S&P rates Tesoro Corp term loan
Jan 16 - Standard & Poor's Ratings Services said today that it assigned its 'BBB-' issue rating and '2' recovery rating to San Antonio, Texas-based Tesoro Corp.'s proposed $500 million term loan B that will mature in 2016. The company intends to use net proceeds from the offering to finance the purchase of British Petroleum's integrated Southern California refining and marketing business and for general corporate purposes. The term loan will be secured by a perfected security interest in all equity interests of certain subsidiaries and certain trademarks owned and acquired by the borrower and a second priority interest in other tangible and intangible assets. The rating reflects the consolidated credit quality of Tesoro and its operating subsidiaries, its "fair" business risk profile, and "significant" financial risk profile. The issue rating is one notch above the corporate credit rating given the collateral package. We expect "substantial" recovery on the debt in case of a payment default. Currently, Tesoro Corp. has about $1.3 billion in debt outstanding. In 2013, we expect Tesoro's debt/EBITDA to be roughly at 1.5x to 2x, and for the company to maintain adequate liquidity. RELATED CRITERIA AND RESEARCH -- Business/Financial Risk Matrix Expanded, Sept. 18, 2012 -- Key Credit Factors: Criteria For Rating The Global Oil Refining Industry, Nov. 28, 2011 -- Assumptions For Assigning Recovery Ratings To The Debt Of U.S. Oil Refining Companies, March 14, 2011 RATINGS LIST Tesoro Corp. Corp. credit rating BB+/Stable/-- New Rating Proposed $500 mil term loan B BBB- Recovery rating 2
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