S&P cuts JSG Packaging, units view to negative

Standard & Poor's said it revised the CreditWatch implications for its ratings on JSG Packaging Ltd. (rated B+) and related entities in the Jefferson Smurfit Group to negative from developing.

Furthermore, the CreditWatch implications for various unsecured notes issued by group entities were also revised to negative from developing. The CreditWatch implications remain negative for the BB- bank loan rating on the group's senior credit facilities and BB- secured debt rating on two outstanding bond issues.

S&P said the rating actions follow the announcement by JSG and the Kappa Packaging group (Kappa Beheer BV BB-/Watch negative/--) that they have proposed that the two entities be combined.

Smurfit/Kappa's business risk profile will be satisfactory, as the group will become the clear market leader in the European containerboard and corrugated board markets, at almost twice the size of the second-largest producer.

S&P noted that Smurfit/Kappa is expected to be highly leveraged, reflecting continued ownership by private equity firms, resulting in weak credit measures.

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