S&P assigns Interstate Operating loan B

Standard & Poor's said it assigned its B rating and its 2 recovery rating to Interstate Operating Co. LP's proposed $125 million senior secured facility, reflecting the expectation for a substantial recovery of principal in the event of a payment default.

The facility will consist of a $60 million revolving credit facility due 2010 and a $65 million term loan due 2010, the agency added.

At the same time, S&P said it affirmed its B corporate credit rating for Interstate Hotels & Resorts Inc., the parent company of Interstate Operating.

The outlook is stable.

The agency noted that the ratings on Interstate reflect the company's niche position in the lodging industry as an independent hotel management company, generally less-favorable management contract terms than for major brand owners, exposure to properties owned by Blackstone Group, which owns 17% of the hotels managed by Interstate and an expected active growth strategy.

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