S&P rates Gibson Energy

Standard & Poor's said it assigned a BB- rating and 3 recovery rating to Gibson Energy ULC's proposed $375 million secured revolver due 2016 and $650 million term loan B due 2018.

The 3 recovery rating indicates 50% to 70% expected recovery in a default.

Gibson is amending its existing credit agreement. It is increasing its revolver to $375 million from $275 million and re-pricing its existing $650 million term loan B.

The re-pricing of the term loan will reduce Gibson's interest expense, S&P said, while the increase in revolver size will allow the company to fund future growth opportunities.

The ratings reflect the company's fair business risk profile with diversified revenue streams, a solid market position in certain segments and moderate commodity price exposure, the agency said.

The ratings also consider its significant financial risk profile with somewhat weak credit metrics, volatile cash flows in key segments due to cyclicality, exposure to throughput volume fluctuation and the company's acquisitive strategy, S&P said.

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