Recipient email addresses will not be used in mailing lists or redistributed.
Use semicolon to separate each address, limit to 20 addresses.
characters you see
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
Don't want to see this again?
Accept our to continue to Moodys.com:
AND SCROLL DOWN!
By clicking “I AGREE” [at the end of this document],
you indicate that you understand and intend these terms and conditions to be
the legal equivalent of a signed, written contract and equally binding, and
that you accept such terms and conditions as a condition of viewing any and all
Moody’s information that becomes accessible to you [after clicking “I AGREE”] (the
“Information”). References herein to “Moody’s” include Moody’s
Corporation, Inc. and each of its subsidiaries and affiliates.
Terms of One-Time Website Use
you have entered into an express written contract with Moody’s to the contrary,
you agree that you have no right to use the Information in a commercial or
public setting and no right to copy it, save it, print it, sell it, or publish
or distribute any portion of it in any form.
acknowledge and agree that Moody’s credit ratings: (i) are current opinions of
the future relative creditworthiness of securities and address no other risk; and
(ii) are not statements of current
or historical fact or recommendations to purchase, hold or sell particular
securities. Moody’s credit ratings and
publications are not intended for retail investors, and it would be reckless
and inappropriate for retail investors to use Moody’s credit ratings and
publications when making an investment decision. No
warranty, express or implied, as the accuracy, timeliness, completeness,
merchantability or fitness for any particular purpose of any Moody’s credit
rating is given or made by Moody’s in any form whatsoever.
3. To the extent permitted by law, Moody’s and its directors,
officers, employees, representatives, licensors and suppliers disclaim
liability for: (i) any indirect, special, consequential, or incidental losses
or damages whatsoever arising from or in connection with use of the
Information; and (ii) any direct or compensatory damages caused to any person
or entity, including but not limited to by any negligence (but excluding fraud
or any other type of liability that by law cannot be excluded) on the part of
Moody’s or any of its directors, officers, employees, agents, representatives,
licensors or suppliers, arising from or in connection with use of the
4. You agree to read [and
be bound by] the more detailed disclosures regarding Moody’s ratings and the
limitations of Moody’s liability included in the Information.
5. You agree that any disputes relating to this agreement or your use of
the Information, whether sounding in contract, tort, statute or otherwise,
shall be governed by the laws of the State of New York and shall be subject to
the exclusive jurisdiction of the courts of the State of New York located in
the City and County of New York, Borough of Manhattan.
26 Sep 2003
MOODY"S DOWNGRADED CROWN CENTRAL PETROLEUM'S SENIOR UNSECURED NOTES RATING TO Caa3 FROM Caa1; OUTLOOK REMAINS NEGATIVE
Approximately $125 million of debt securities affected
New York, September 26, 2003 -- Moody's downgraded Crown Central Petroleum Corporation's ("Crown")
ratings. The outlook remains negative. The downgrade reflects
Crown's continued weak financial performance, highlighted
by recurring consolidated operating losses despite mid-cycle conditions
for 1H 2003; the overall decline in the value of Crown's assets
relative to debt; already tight liquidity and limited capital resources
burdened by heavy working capital needs, especially during high
commodity prices; heavy Tier II capital spending requirements;
high leverage; and significant pension liabilities. The ratings
benefit from the support from Rosemore, a privately held company
owned by the family of Henry Rosenberg which owns 100%; and
the diversity of earnings from Crown's retail network.
Moody's ratings actions for Crown are as follows:
i) Downgraded to Caa2 from B3 - Crown's senior implied rating.
ii) Downgraded to Caa3 from Caa1 - Crown's $125 million
10.875% senior unsecured notes due 2005
iii) Downgraded to Caa3 from Caa1- Crown's senior unsecured
The outlook reflects Crown's liquidity. Though having been
aided by some asset sales, liquidity is still very tight during
periods of the working capital cycle. The company has a $125
million secured revolver in place, but is limited to $50
million of cash borrowings by the note indenture. During the crude
purchase period, the company tends to draw down almost the entire
$50 million allowed under the revolver and utilize borrowings from
the parent in the form of unsecured, uncommitted facilities.
Given the recurring operating losses and the inherent volatility of cash
flows, Moody's believe the availability of the revolver could
be critical for Crown to meet the next six months of interest expense
(approximately $ 9 million), including the $7 million
bond coupon in February, $1 million per month of planned
capital expenditures, and working capital needs which continue to
be high given commodity prices. Further, the revolver matures
in January 2004, a couple of weeks before the next bond coupon due
date. Though the facility was previously extended in June 2003
to January 2004, Moody's believes another extension will likely
depend on significant progress of asset sales by that time. Crown's
ratings would be pressured if the facility is not extended or if asset
sales have not materially progressed.
The negative outlook also considers the uncertainty surrounding the sale
of the company or its assets. Crown had previously attempted to
sell only its refineries and retain the retail operations. However,
since no deal for its two Texas refineries could be reached, the
entire company (or its assets) is for sale. Through the first six
months of 2003, the company sold 18 retail units and its Virginia
products terminal for approximately $5.8 million of net
proceeds and has additional assets under contract for sale that could
generate approximately $20 to $30 million of additional
proceeds during the third and fourth quarters of 2003. However,
the sales process is still ongoing with no certainty as to the exact timing
of sales and amount of proceeds, which Moody's believes will
be the primary source of debt repayment absent significant shareholder
The ratings reflect the company's continued deterioration of its
financial condition and ongoing weak operating results. Crown's
recurring operating losses combined with a $65 million write-down
of its Pasadena refinery in 2002, resulted in the company reporting
a negative net worth of $75.6 million as of 6/30/03.
Operating losses stem from already high operating costs exacerbated by
high natural gas costs. Despite solid refining margins in 1H'03,
the lack of sufficient liquidity and capital prevented the company from
being able to run the refinery at full capacity, continuing to weigh
on earnings and cash flow. The company entered into a 65,000
barrels per day (bpd) processing agreement with Statoil (expires at end
of September), which enabled the Crown to generate fee income without
the working capital burden of crude procurement. However,
not having more of its own product to sell in a mid-cycle environment
that has extended through Q3'03, is a lost opportunity to
generate significantly better earnings and cash flow for debt service
The ratings are also restrained by the declining value of the company's
assets relative to the existing debt as evidenced by the FYE 12/31/02
$65.5 million write-down of its Pasadena refinery
and the lack of a sale of the two refineries. If the refineries
are not sold, they face being shut down by 2005 if the capital spending
required to bring the refineries into compliance with regulation is not
made. Although the company has only two small refineries,
it does not qualify for small refiner status due to the scale of its retail
operations and therefore cannot defer this capital spending. Given
the current lack of financial resources, Moody's estimates
that Crown is not likely to be in position to make those expenditures
by the required time without support from its shareholder, resulting
in further asset write-downs and facing significant costs associated
with closing the refineries.
The ratings also consider the company's significantly underfunded
defined pension plans, which at 12/31/02 was $67 million.
While this may be higher than the required funding amount, in terms
of priority of claims, any defined pension obligations would rank
pari passu with senior unsecured bondholders and impact the overall asset
coverage of the bonds.
The ratings are supported by Rosemore's 100% ownership of
Crown and the support that it has provided to Crown in the form of working
capital lines and performance guarantees that enable Crown to obtain its
crude oil for its refineries.
The ratings also benefit from the retail business which has generated
modest returns and provides the bulk of the asset value for bond holders.
At 6/30/03, the company had about 300 retail outlets, the
sales of which Moody's believes will provide the main source of
cash for note repayment.
Due to higher refining and retail margins, Crown reported revenues
of $368 million for the three months ended June 30, 2003
compared to $372 million for the same period in 2002 and $418
million in the first quarter of 2003. However despite mid-cycle
conditions, Crown still reported an operating loss of $15
million for the quarter. Leverage (based on annualized EBITDA/debt)
for the quarter was high at 6.5x, while its interest coverage
was 1.5x and approximately 1.0x when factoring in capex.
The senior unsecured notes are not guaranteed by subsidiaries, thus
are notched from the senior implied rating to reflect the effective and
structural subordination to Crown's $125 million senior credit
facility and capital leases ($8 million as of 6/30/03).
Crown Central Petroleum, headquartered in Baltimore, Maryland,
owns and operates two refineries in Texas, and markets and distributes
products through company-owned gas stations and convenience stores.
Alexandra S. Parker
Senior Vice President
Corporate Finance Group
Moody's Investors Service
Asst Vice President - Analyst
Corporate Finance Group
Moody's Investors Service
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.
CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.
Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com
under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.
Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.