S&P cuts Valley National Gases loans to B

Standard & Poor's said it downgraded Valley National Gases Inc.'s proposed $165 million first-lien term loan and $50 million first-lien revolving credit facility to B with recovery ratings of 2 from B+ with recovery ratings of 1.

The CCC+ rating and 5 recovery rating on the company's proposed second-lien term loan, which has been upsized to $90 million from $75 million, remain unchanged.

The outlook is stable.

The agency said the revised ratings reflect a change to the bank loans' preliminary terms and conditions that will strip all proposed maintenance financial covenants from the first- and second-lien term debt, which weakens the lenders' ability to influence the company's behavior and demand higher compensation if the company's credit is worse than expected.

"In our opinion, this change could allow additional value deterioration before a payment default is triggered. As such, our anticipated recovery for the first-lien lenders is now approximately 95%, compared with slightly more than 100% at the time we assigned the original ratings," S&P credit analyst Wesley E. Chinn said in an agency rating.

The B corporate credit rating on Valley National reflects the limited size and diversity of its businesses relative to other rated chemical and industrial companies, S&P said.

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