S&P rates SG Resources loans BB-

Standard & Poor's said it assigned its preliminary BB- issue rating and 3 recovery rating to SG Resources Mississippi LLC's $235 million senior secured credit facilities, which consist of a $75 million senior secured revolving credit facility due 2012 and a $160 million senior secured delayed-draw term loan B due 2014. Ratings are preliminary and contingent on final documentation.

The outlook is stable.

The company will use proceeds to develop and construct a natural gas storage project in Greene County, Miss., and to finance the acquisition of the necessary base gas, working-capital needs and debt service reserve.

The rating reflects risks that include ongoing construction of the project, contract expirations, refinancing and increased competition, S&P said.

However, the agency said these risks are adequately offset by the company's contracts that ensure cash flow, adequate liquidity and a good management team.

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