Premcor USA and Unit Ratings Affirmed, Outlook Revised to Positive
NEW YORK (Standard & Poor's) Nov. 16, 2004--Standard & Poor's Ratings
Services said today that it affirmed its 'BB-' corporate credit ratings on
The Premcor Refining Group Inc. and parent Premcor USA Inc. and revised
its outlook on the companies to positive from stable.
As of Sept. 30, 2004, Old Greenwich, Conn.-based Premcor had
approximately $1.8 billion of debt outstanding.
The outlook revision reflects Premcor's significantly improved liquidity,
which provides it with greater ability to withstand a potential period of
weak margins. As of September 30, 2004, Premcor's cash balance was $710
million, up from $500 million at year-end 2003, and the increase was
generated largely through free operating cash flow.
"A ratings upgrade will hinge on how the company either consumes or
conserves liquidity as it strives to meet its heavy capital-spending
requirements through 2006," said Standard & Poor's credit analyst Steven
Nocar.
"A ratings upgrade could occur in mid-2005 if the company is able to fund
its burdensome capital spending needs internally and can demonstrate that
it will continue to do so through the peak spending period," continued Mr.
Nocar.
The ratings on Premcor reflect its position as a leveraged, independent
oil refiner operating in a very competitive, capital-intensive, and
erratically profitable industry.
Complete ratings information is available to subscribers of
RatingsDirect, Standard & Poor's Web-based credit analysis system, at
www.ratingsdirect.com. All ratings affected by this rating action can be
found on Standard & Poor's public Web site at www.standardandpoors.com;
under Credit Ratings in the left navigation bar, select Find a Rating,
then Credit Ratings Search.
| Primary Credit Analyst: | Steven K Nocar, New York (1) 212-438-7803; steven_nocar@standardandpoors.com |
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