S&P rates Getty Petroleum loan

Standard & Poor's said it assigned its B+ corporate credit rating to Getty Petroleum Marketing Inc. In addition, S&P assigned its BB- rating and a recovery rating of 1 to the company's proposed $75 million senior secured revolving credit facility due 2008 and its B+ rating and recovery rating of 2 to the company's proposed $270 million senior secured term loan B due 2010.

The outlook is stable.

S&P said the ratings on Getty reflect the company's participation in a brutally competitive, capital-intensive, and cyclical industry and its very high debt leverage.

These credit weaknesses are mitigated by a focus on Northeastern U.S. markets that have some insulation from hypermarket competition, an experienced management team with a sound strategy for improving margins, and a credit facility structure that greatly circumscribes Getty's ability to either distribute cash to its shareholder or engage in growth projects without raising additional equity capital. In addition, Getty should generate modest free operating cash flow in most periods and currently has fairly good liquidity.

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