S&P rates Giant Industries notes B-

Standard & Poor's said it assigned its B- rating to Giant industries Inc.'s $150 million senior subordinated notes due 2014, affirmed the ratings on Giant and revised the outlook to positive from negative.

S&P said the rating action follows Giant's announcement that it is refinancing a significant portion of its debt and also making a material reduction in its overall debt burden.

Giant intends to use proceeds from the notes being issued, about $60 million of expected proceeds raised from its recent common stock offering, and about $27 million in cash balances to repurchase Giant's existing $150 million 9% senior subordinated notes due 2007, $54 million of its 11% senior subordinated notes due 2012, and the remaining balance on its $20 million senior secured mortgage loan.

The outlook revision to positive reflects the possibility for a ratings upgrade over the intermediate term (one to two years) if Giant continues its use excess free cash flow for further debt reduction.

S&P said the ratings on Giant reflect its participation in the erratically profitable, capital-intensive refining and marketing segment of the petroleum industry and the company's improving leverage profile.

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