S&P drops PinnOak

Standard & Poor's said it lowered its corporate credit rating on PinnOak Resources LLC to CCC+ from B- and removed all ratings from CreditWatch, where they were placed with negative implications on Sept. 1.

At the same time, the bank loan rating on its $175 million credit facility was lowered to B- from B and the recovery rating was affirmed at 1, the agency said.

The outlook is negative.

"The downgrade reflects our concerns about the company's declining liquidity levels--brought about by recent poor financial performance, which we deem to be inadequate to deal with the inherent operating risks endemic to coal mining," said S&P credit analyst Marie Shmaruk.

"In addition, we expect the company's liquidity position to deteriorate further by year-end, as it continues to deal with operational problems and a below-market coal supply contract."

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