S&P rates Clarke American loan B+

Standard & Poor's said it affirmed its B+ corporate credit rating on Clarke American Corp. and removed its ratings from CreditWatch with negative implications. The agency also said it assigned its B+ bank loan rating and 3 recovery rating to the company's proposed $1.9 billion senior secured credit facilities. The facilities consist of a $1.8 billion term loan due in seven years and a $100 million revolver due in six years. The facilities are rated the same as the corporate credit rating.

The outlook is negative.

Proceeds will be used to fund the $1.7 billion acquisition of John H. Harland Co. and refinance the existing debt at Clarke. The affirmation reflects S&P's favorable view of the combination between Clarke and Harland, given the relatively high potential for synergies and the consolidation of participants in the highly competitive check printing industry.

Although credit measures will initially be somewhat weak for the ratings, the agency said it expects that earnings growth stemming from synergies and modest debt reduction will result in improved credit metrics. Still, this is a large transaction, S&P said, and Clarke may experience some integration challenges after closing.

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