S&P rates United Refining notes B-

Standard & Poor's said it assigned its B- rating to United Refining Co.'s $200 million senior notes due 2014 and affirmed the ratings. The outlook has been revised to stable from negative.

Proceeds of the notes will be used to refinance the company's existing $180 million senior notes due 2007, $7 million for the redemption premium and accrued interest, and to pay $5 million for a shareholder distribution.

S&P said the ratings on United reflect the significant challenges the company faces as a small independent, private petroleum refiner and marketer with substantial debt, participating in a competitive, erratically profitable, and highly capital-intensive industry. These weaknesses are tempered by the company's niche market and related transportation cost advantage, ability to process heavy-sour crude oil, modest spending necessary to meet upcoming clean-fuels requirements, and sufficient cash resources for at least the next year.

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