Standard & Poor's has put itsratings for Alon Israel Oil Company Ltd. subsidiary Alon USA Energy Inc. (NYSE:ALJ) on "CreditWatch with negative implications" following the explosion at the company's Big Spring Refinery in Texas earlier this week. S&P's ratings for the company include a "B+" corporate credit rating.
S&P credit analyst Paul B. Harvey noted, "The CreditWatch action reflects potentially lower liquidity and cash flows following Monday's explosion and fire at the company's Big Spring refinery. We estimate that the refinery in Big Spring, Texas, accounted for more than 70% of operating income from refining operations through the nine months through September 2007. We are concerned that if the extent of the damage and loss to the Big Spring refinery are more severe than Alon's current estimates, liquidity could weaken and lead us to lower the ratings. The incident comes at a time of weaker refining margins in the West Coast region, where Alon's other refineries operate."
Harvey added, "We intend to resolve the CreditWatch listing when we can sufficiently assess the extent of the damage and its full financial impact. If the damage from the explosion is more severe than currently estimated, we could lower the ratings."
The Big Spring refinery refines 70,000 barrels of oil a day, producing fuel and asphalt for the southwest, west and central US. The refinery has 170 employees.
Alon USA's share rose 2.2% yesterday to $17.64, giving a market cap of $825 million, but fell 3.2% in after-hours trading.
Published by Globes [online], Israel business news - www.globes-online.com - on February 21, 2008
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