Moody's rates Vulcan Energy loan B1

Moody's Investors Service assigned a B1 rating to Vulcan Energy Corp.'s $175 million senior secured 6-year term loan B to funding part of a $456 million purchase of Plains Resources, Inc. Moody's said the rating is on review for upgrade.

The balance of the Plains acquisition will be funded by a $65 million 5-year senior unsecured loan guaranteed by Paul G. Allen, $184 million of cash common equity from Vulcan Capital (controlled by Paul Allen), and $31.5 million of cash equity from Vulcan Energy management.

Plains Resources key assets and the loan's collateral include a 44% interest in the general partner of Plains All-American Pipeline, LP and 22% (12.4 million) of Plains All-American's common limited partner units. Comfort is gained by the fact that Vulcan Energy's two senior officers will continue holding a separate 20% of Plains All-American's general partner, granting effective control over it by Vulcan Energy, Moody's said. Independent private equity holds the remaining 36% of the general partner.

Other Plains Resources assets include 16 mmboe of high cost, low value, environmentally intensive South Florida oil reserves north of the Everglades, needing strong prices to cover costs.

Vulcan Energy is on review for upgrade because Plains All-American is on review for upgrade, Moody's said.

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