S&P rates KI Holdings notes B-

Standard & Poor's said it assigned its B+ corporate credit rating to KI Holdings Inc., the parent of Pittsburgh-based Koppers Inc. S&P also assigned its B- rating to KI Holdings' proposed $100 million senior discount notes due 2014.

At the same time, S&P affirmed its B+ corporate credit rating on Koppers Inc. and revised the outlook to negative from stable.

Proceeds from the proposed senior discount notes issue will be used to fund a $76 million dividend to shareholders and $20 million in cash will be retained on the balance sheet at the parent company for general corporate purposes.

S&P said the ratings on KI Holdings and Koppers Inc. reflect a below-average business position, attributable to a relatively narrow scope of operations and concentration of sales by customer base and end market; and a very aggressive financial policy, including elevated leverage measures following two debt-financed dividend payments over the last year. These factors are only partially offset by the company's leading market shares, high percentage of long-term contracts, and good geographic diversity.

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