NEW YORK (AP) â¿¿ Standard & Poor's Ratings Services said Wednesday that it lowered its non-investment grade corporate credit rating for Patriot Coal Corp. to "CCC" from "B-," citing the uncertainty surrounding the company's ability to secure new financing before it older loans come due.
S&P also lowered its issue-level rating on the coal company's senior unsecured debt to "CCC" from "B-." The recovery rating remains "3," which means investors could expect to recoup between 50 and 70 percent of their investments if the company defaults on its loans.
St. Louis-based Patriot said Tuesday that it's working with private equity firm The Blackstone Group and a law firm to secure a financing package.
Investors are afraid that the company will not be able to secure a $625 million loan, announced earlier this month, before it must repay older loans by next March. Patriot said Tuesday that it is continuing to work with the lenders."As operating performance remains weak as a result of curtailed production, we doubt Patriot's ability to meet near term obligations," S&P said in its statement on Wednesday. The ratings service noted that Patriot has significant exposure to the high-cost Central Appalachia region and faces the inherent risks of coal mining, including operating problems, price volatility, rising costs and regulatory scrutiny. Patriot shares rose 45 cents, or 20 percent, to $2.63 in afternoon trading. Its shares dipped to a 52-week low of $1.36 per share during the day on Tuesday.