S&P assigns Altra Nebraska notes B

Standard & Poor's said it assigned its preliminary B rating and 2 recovery rating to Altra Nebraska LLC's $130 million senior secured notes due 2018.

The outlook is stable.

The agency said that Altra Nebraska will use the note proceeds to fund a portion of the cost to construct a 100-million gallon-per-year nameplate capacity, dry-mill ethanol plant in Carleton, Neb.

According to S&P, the preliminary B rating reflects the exposure to volatile commodity prices on the revenue and cost sides of the margin equation as ethanol prices are highly correlated to oil prices and in turn, gasoline prices, but are not correlated to feedstock prices, mainly corn and natural gas and the industry reliance on a federal excise tax subsidy for gasoline blenders, called the Volumetric Ethanol Excise Tax Credit.

The agency noted that strengths include strong and potentially growing federally mandated ethanol use as well as low technology and operational risks.

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