S&P may lift Darling

Standard & Poor's said it placed Darling International Inc.'s BB- corporate credit rating on CreditWatch with positive implications.

"The CreditWatch listing reflects our opinion that the company's announced equity offering and intention to use a portion of the proceeds to repay debt reflects a more moderate financial policy following its debt-financed acquisition of Griffin Industries," S&P analyst Christopher Johnson said in a statement.

In addition, debt reduction could result in a pro forma debt-to-EBITDA ratio of less than 2.5x compared with the prior leverage estimate of about 3.0x pro forma for the Griffin transaction.

S&P said it estimates the company may repay debt by more than $50 million with free cash flow in fiscal 2011, which further supports the likelihood that the company could sustain future debt leverage of less that 2.5x.

The BB- corporate credit rating reflects Darling's weak business risk profile and a significant financial risk profile following the Griffin acquisition, S&P said.

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