S&P rates Venoco notes CCC+, ups existing ratings

Standard & Poor's said it assigned an issue-level rating and a recovery rating to Venoco Inc.'s new $150 million senior unsecured notes due 2017. The issue-level rating is CCC+, and the recovery rating is 6.

At the same time, S&P said it raised the issue-level rating on Venoco's second-lien term loan and existing 8¾% senior notes to BB- from B and revised the recovery rating to 1 from 3.

The outlook is stable.

The company plans to use net proceeds from the proposed offering, combined with a roughly $7 million draw under its revolver, to redeem the existing 8¾% senior notes.

The ratings on Venoco reflect its highly leveraged financial profile, limited cushion under its leverage covenant, and significant geographic concentration in California, S&P said.

The stable outlook is based on S&P's view that the company will keep its spending within cash flow for the remainder of 2009 and that its liquidity will remain near current levels.

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