Moody's rates SemCrude loans Ba3, B1

Moody's Investors Service said it assigned a B1 senior implied rating to SemGroup LP and rated wholly owned SemCrude LP's three tranche, $550 million senior secured bank and institutional credit facilities.

More specifically, Moody's assigned a Ba3 rating to the $400 million four-year revolving working capital facility, with a $200 million sub-limit for letters of credit and contango borrowings, first secured by SemCrude's working capital assets and junior secured by each guarantor's fixed assets. Moody's also assigned a B1 rating to the $50 million four-year revolving secured credit facility, first secured by SemCrude's fixed assets and junior secured by SemCrude's working capital assets, and assigned a B1 rating to the $100 million six-year term loan B that will be fully drawn at the closing, first secured by SemCrude's fixed assets and junior secured by SemCrude's working capital assets.

One loan agreement governs the loan facilities, which are joint and severally guaranteed by SemGroup, its domestic subsidiaries, and foreign subsidiaries (to the extent it does not trigger adverse tax consequences). The facilities will repay $90 million of revolver borrowings, just over $50 million of working capital borrowings, and support the issuance of an existing $156 million of letters of credit.

The outlook is stable but sensitive to leveraged acquisitions, avoidance of material deterioration in marketing and trading results and controls, and to maintaining sound overall cash flow trends.

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