S&P drops Gundle

Standard & Poor's said that it lowered its long-term corporate credit rating on Gundle/SLT Environmental Inc. to CCC+ from B-.

The outlook is negative.

At the same time, S&P said it lowered its issue-level rating on Gundle's $150 million of 11% senior unsecured notes to CCC, one notch lower than the corporate credit rating, from CCC+.

The recovery rating remains at 5, the agency noted.

"The downgrade follows weaker-than-expected operating results as eroding demand and an inability to fully pass through higher raw material prices impacts Gundle's earnings," said S&P credit analyst Ket Gondha.

"While key measures of credit quality remain at acceptable levels, the company's depressed operating results reduce the amount of cushion available for covenant compliance, and we are concerned about a potential covenant violation in 2009."

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