S&P rates American Gilsonite notes B

Standard & Poor's said it assigned a B corporate credit rating to American Gilsonite Co., along with a B rating to the company's proposed senior secured $260 million notes due in 2017.

The agency also assigned a recovery rating on the notes of 4, indicating 30% to 50% expected recovery in a default.

The outlook is stable.

The notes are being sold pursuant to Rule 144A without registration rights, SP& said.

The ratings consider American Gilsonite's relatively small size, scope and reliance on a single end market; though the company is the only producer of Gilsonite in the United States and has consistently generated positive cash flow, S&P said.

The company has a vulnerable business risk profile, reflecting the company's lack of diversity given its single product and mine complex, dependence on the volatile oil and gas industry and the threat that a substitute option for Gilsonite in drilling fluids could be developed, the agency said.

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