S&P: Regency Gas on developing watch

Standard & Poor's said it placed its B+ corporate credit rating on Regency Gas Services LP on CreditWatch with developing implications.

According to the agency, the rating action follows the company's announcement that its former general partner owner, HM Capital Partners LLC (formerly Hicks, Muse, Tate & Furst), has sold its general parter and limited partner ownership interests to GE Energy Financial Services.

Although S&P said it would expect the change in ownership and control to have favorable implications for Regency's capital structure, it awaits additional information on what exactly the company's strategic direction and financial policy will be going forward. Regency remains highly leveraged following its TexStar Field Services LP acquisition and maintaining its current rating would require a sizable equity issuance.

S&P noted that the ratings on Regency reflect a weak business risk profile, which includes a brief operating history, a commodity-price-sensitive contract mix, a small asset base compared with those of its peers and a challenging competitive position.

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