March 20 - Standard & Poor's Ratings Services today assigned its 'B+' (one notch higher than the corporate credit rating) issue-level rating to Alon USA Energy Inc.'s proposed $700 million term loan due 2018. We assigned a '2' recovery rating to this debt, indicating our expectation of substantial (70% to 90%) recovery in a payment default. The 'B+' issue rating incorporates our expectation that the company will use the proceeds from the proposed loan to repay approximately $425 million outstanding under its existing term loan and to retire approximately $216.5 million outstanding of the Alon Refining Krotz Springs Inc. 13.5% senior secured notes due 2014. We expect to withdraw our existing ratings on these issues upon successful completion of the above transactions. The rating on Dallas-based Alon USA Energy Inc. reflects its "vulnerable" business risk (as our criteria define the term) and its challenges as a relatively small, independent oil refining and marketing company, with limited diversity and a high degree of financial and operating leverage. The ratings also reflect the company's participation in the highly competitive refining industry that has cyclical profitability and high fixed-cost requirements for refinery equipment and compliance with environmental regulations. The ratings also incorporate its parent Alon Israel Oil Inc.'s support for Alon USA Energy Inc. Standard & Poor's takes a consolidated approach to Alon USA Energy Inc.'s analysis and includes results from the Krotz Springs refinery. We view the refining industry as extremely volatile, due to the supply-demand economics of both crude supply and product demand, which can cause large fluctuations in industry profitability within short periods of time. RELATED RESEARCH AND CRITERIA -- Criteria Guidelines For Recovery Ratings, Aug. 10, 2009. -- Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, May 27, 2009 RATINGS LIST Alon USA Energy Inc. Corporate credit rating B/Negative/-- New Rating Proposed $700 mil term loan due 2018 B+ Recovery rating 2 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.