S&P puts Western Refining on watch

Standard & Poor's said it placed its BB- rating on Western Refining Inc. on CreditWatch with negative implications, following the announcement that the U.S. Federal Trade Commission would sue to block Western's acquisition of Giant Industries Inc.

The action is based on the assumption that a merger with Giant would decrease competition in the Southwestern U.S. market for light products, at a time when higher fuel production at Giant's New Mexico refineries should increase supplies, the agency noted.

At the same time, the ratings on Giant Industries (B+/Watch positive) were affirmed, S&P said, adding that the CreditWatch listing on Western Refining reflects the possibility for negative rating actions if the merger of Western and Giant Industries is terminated.

According to the agency, the ratings affirmation on Giant Industries reflects the potential upgrade if the acquisition by Western is approved.

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