S&P: McJunkin view positive

Standard & Poor's said it revised McJunkin Corp.'s outlook to positive from stable. The agency also affirmed the issuer's B+ corporate credit rating and the BB rating on its proposed $650 million asset-backed revolving credit facility, which represents a $350 million amendment to McJunkin's existing $300 million facility.

Of the proceeds, $375 million will help fund the pending merger of McJunkin with Red Man Pipe and Supply Co.

According to S&P, the outlook revision reflects the somewhat improved business position and financial profile of McJunkin following the closing of the pending merger. As a result of a large equity contribution from Goldman, the issuer's pro forma total debt-to-EBITDA ratio as of June 30 is about 3 times.

The ratings reflect the company's highly fragmented and competitive, cyclical end markets, volatile steel prices and relatively slow stock inventory turns, the agency said.

These weaknesses are partly offset by the pro forma company's long-term customer relations, geographic and customer diversity, highly variable cost structure, contracts that generally allow the company to pass along price increases to the customer, relatively low capital expenditure requirements and significant scale, S&P said.

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