S&P gives Allis-Chalmers notes B+

Standard & Poor's said it assigned its B+ rating, the same as the corporate credit rating, to Allis-Chalmers Energy Inc.'s proposed $350 million senior unsecured notes due 2018.

At the same time, the agency said it assigned the notes a recovery rating of 3, indicating meaningful recovery in the event of a payment default.

The company will use note proceeds to help finance the acquisition of Bronco Drilling Co. Inc. (unrated), the agency said, adding that it also affirmed the B+ corporate credit rating.

The outlook is stable.

S&P added that the corporate credit rating on Allis reflects recently soft operating performance at the company, specifically its rental services segment and low rig utilization rates at Bronco during the fourth quarter of 2007 and the first quarter of 2008, which resulted in lower cash flows.

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