S&P rates Murray Energy loan BB-, notes B

Standard & Poor's said it assigned a BB- rating to Murray Energy Corp.'s proposed $300 million first-lien term loan.

The recovery rating is 1, indicating 90% to 100% expected default recovery.

S&P also said it assigned a B rating to the $400 million second-lien secured notes that also are part of the refinancing. The recovery rating is 4, indicating 30% to 50% expected default recovery.

The agency also said it affirmed the B corporate credit rating and the B issue rating on Murray's $688 million in senior secured notes due 2015.

The recovery rating on the notes is 3, indicating 50% to 70% expected default recovery.

The outlook remains stable.

The proceeds will be used to redeem the company's existing $688 million in senior secured notes, Chiza Vitta, an S&P analyst.

Murray also will have an unrated $50 million asset-based revolving credit facility upsized from $25 million as part of this transaction.

The ratings reflect Murray's relatively small size, lack of end-market diversity, high customer concentration and significant debt levels, S&P said.

However, the company maintains a favorable cost profile, sells coal under long-term contracts and has a customer base consisting of the coal-fired plants, the agency said.

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