S&P ups American Petroleum Tankers, rates loan BB-

Standard & Poor's said it raised its corporate credit rating on American Petroleum Tankers Parent LLC to B from B-. The outlook is stable.

At the same time, S&P assigned a BB- issue rating to the proposed $270 million term loan B, two notches above the corporate credit rating, as well as a 1 recovery rating, indicating expectations of a very high (90%-100%) recovery in a payment default scenario.

"Pro forma for the proposed recapitalization, APT will achieve a significantly improved financial profile, with lower debt leverage and reduced cash interest payments," said S&P credit analyst Funmi Afonja in a news release.

The recapitalization converts about $455 million of paid-in-kind debt, about 64% of reported debt as of Sept. 30, 2012, into common equity. At the same time, the company is refinancing its $285 million senior secured notes priced at 10¼% with a new senior secured credit facility that consists of a $270 million term loan and a $10 million revolver (not rated).

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