S&P rates Gavilon loan BB+

Standard & Poor's said it affirmed Gavilon Group LLC's BB corporate credit rating and a BB+ rating to its proposed $900 million senior secured term loan due 2016 with a recovery rating of 2, reflecting expectations for 70% to 90% recovery.

The outlook is stable.

About $900 million of term loan proceeds and additional drawings of about $600 million on the ABL are expected to fund the acquisition of DeBruce Cos., refinance debt at DeBruce and $550 million of Gavilon's parent holding company seller notes.

"The rating affirmation reflects our opinion that the acquisition of DeBruce moderately improves Gavilon's competitive position as a leading North American grain merchandiser," S&P analyst Christopher Johnson said in a statement.

"Overall, we view Gavilon's business risk profile as fair, primarily reflecting the inherent volatility in its core agriculture and energy merchandising and trading businesses."

Pro forma adjusted debt to EBITDA is expected to be about 2.5x by fiscal year-end 2010.

Ratings reflect the company's participation as a merchandiser in the highly volatile agribusiness and energy trading markets, the agency said.

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