Moody's revises Calumet outlook to stable

Moody's Investors Service said it affirmed Calumet Lubricants Co. LP's B2 corporate family rating, B2 $50 million senior secured term loan rating and B2 $50 million pre-funded senior secured letter-of-credit facility. The outlook was changed to stable from developing.

The ratings affirmation and outlook change reflect the company's current pro-forma leverage levels, which Moody's said is able to support a degree of earnings and cash flow volatility while still needing to meet the distribution needs of a master limited partnership structure; still supportive margins, which recently gained added benefit from unplanned downtime at two competitors' base oil refineries; Calumet's niche market position as an independent leading provider of specialty products; and the timely use of hedging that, thus far, has enabled the company to protect cash flows despite historically weak consolidated core operating earnings.

The ratings remain tempered by the company's capital draining master limited partnership structure layered on an inherently volatile, capital intensive refining business; the company's relatively small scale and lack of diversification of operations; the need to demonstrate it can generate solid consolidated operating earnings before the impact of hedging; the need for sustained sufficient margins on the specialty products segment to compensate for significant losses realized on by-products from the segment; the lack of formal contracts with most of its customers; and that the company is able to operate its Shreveport facility even in a lower margin environment, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.