Moody’s rates Chelsea Petroleum CFR, loan Ba3

Moody's Investors Service said it assigned Chelsea Petroleum Products I, LLC a Ba3 corporate family rating and a Ba3 to its proposed $425 million senior secured term loan.

The agency also assigned a SGL-3 speculative grade liquidity rating and a stable outlook.

Proceeds from the term loan will be used to acquire Gulf Oil LP from Cumberland Farms, Inc. for a total acquisition price of $1.1 billion including inventory. Chelsea is an affiliate of ArcLight Energy Partners Fund VI, LP.

"Gulf's management has demonstrated a consistent track record in operations execution and steady volume growth over the years," Moody's senior analyst Sreedhar Kona said in a news release.

"Although ArcLight's significant equity contribution, experience with midstream assets and expertise to potentially enhance Gulf's hedge strategies are all credit positive factors, Chelsea's rating is constrained by Gulf's lack of clear competitive strength in its markets and moderate business risk due to commodity price exposure."

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