Fitch assigns Vertex Energy B-, loan B

Fitch Ratings said it assigned a first-time B- long-term issuer default rating to Vertex Energy Inc. and Vertex Refining Alabama LLC. Fitch also gave B/RR3 ratings to Vertex Refining Alabama's $165 million secured term loan. The outlook is stable.

“Vertex's B- rating reflects its small scale compared to peers, high sensitivity to U.S. Gulf Coast crack spreads, low refining complexity, single refinery operational risk, risks related to its renewable diesel project, and reliance on free cash flow (FCF) generation to support liquidity. The rating benefits from very strong near-term expected refining margins, low leverage, and a forward-looking energy transition profile of the business model,” Fitch said in a press release.

The agency said it projects Vertex’s 2022 EBITDA to reach $298 million from slightly positively or negative EBITDA from its legacy assets in 2018-2021.

The outlook is pushed by the agency’s estimates of positive 2022-2025 FCF for Vertex which assumes refinery crack spreads below current levels. “Fitch's current strong FCF forecast props up the company's liquidity,” the agency said.

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