OREANDA-NEWS. The change in outlook reflects a deterioration in the Company's financial condition, specifically a fall in gross profits and consequent operating losses coupled with an increase in net financial debt.

RusRating has also placed MCW Fuels Inc. on its watch list, which means that further revisions to the rating or rating outlook (both favourable and unfavourable) are possible, depending on what additional information is provided by the Company or emerges in public sources.

The rating itself is based on an experienced and qualified management team and the substantial market value of assets held by the parent company.

Constraining factors include the Company's modest size; a high current debt burden; and risks associated with the investment stage of the parent group's oil and gas production business, which could limit prospects for future support.

MCW Fuels Inc. is a California fuel distributor that supplies more than five hundred petrol stations and serves more than a hundred corporate clients in the western United States. Set up in 1938 and previously known as McWhirter Fuels Distributing Inc., it is a wholly-owned subsidiary of the Canadian public holding company MCW Energy Group Ltd., whose shares trade on the TSX Venture Exchange. A second subsidiary, MCW Oil Sands Recovery, holds a lease on oil sands in the Asphalt Ridge region of Utah and is now completing construction of a processing facility based on proprietary technology.

The Company's debt burden is very high and characterised by moderate interest-rate risk; currency risk is absent. Its operating margin is negative. The balance sheet consists mainly of intangible assets (investments in re-branding petrol stations) plus trade accounts receivable. Overall risk sensitivity is high. Cash flow gaps are possible in the medium term.