Jan 16 - Standard & Poor's Ratings Services today updated its recovery
analysis on Houston, Texas-based TPC Group Inc. to reflect the company's
proposed $100 million add-on to its existing $655 million senior secured notes.
We have maintained our 'B' issue-level rating and '4' recovery rating on the
senior secured notes, indicating our expectation of average (30% to 50%)
recovery in the event of a payment
We expect that the proceeds from the add-on offering will be used to pre-fund
capital spending associated with the restart of one of the company's idle
dehydrogenation units, which will produce on-purpose isobutylene. All of our
other existing ratings on the company, including the 'B' corporate credit
rating, remain unchanged. The outlook is stable.
The ratings on TPC Group reflect its narrow product range of commodity
compounds, limited customer and geographic diversity, cyclicality in its key
markets, modest EBITDA margins, and very aggressive financial policies. These
risk factors are partially offset by the company's favorable competitive
position and our expectation that butadiene will remain structurally short
over the next few years due to the shift toward light cracking. Standard &
Poor's characterizes TPC Group's business risk as "weak" and its financial
risk as "highly leveraged."
For the latest corporate credit rating rationale, see Standard & Poor's
research update on TPC Group, published Dec. 21, 2012, on RatingsDirect. For
the complete recovery analysis, please see our recovery report on TPC Group to
be published shortly after this report on RatingsDirect.
RELATED CRITERIA AND RESEARCH
-- Methodology and Assumptions: Standard & Poor's Standardizes Liquidity
Descriptors For Global Corporate Issuers, July 2, 2010
-- Methodology: Business Risk/Financial Risk Matrix Expanded, Sept. 18,
-- Key Credit Factors: Business and Financial Risks In The Commodity And
Specialty Chemical Industry, Nov. 20, 2008
TEMPORARY CONTACT NUMBERS
Daniel Krauss, CFA, New York, (1) 347-979-5750; Paul J Kurias, New York, (1)
TPC Group Inc.
Corporate Credit Rating B/Stable/--
TPC Group Inc.
Senior Secured B
Recovery Rating 4