S&P could cut Kraton, Arizona Chemical

Standard & Poor's said it placed its B+ corporate credit rating on Kraton Performance Polymers Inc. and B+ corporate credit rating on Arizona Chemical Holdings Corp. on CreditWatch with negative implications.

In addition, the agency placed its issue-level ratings on Arizona Chemical's senior secured debt on CreditWatch with negative implications.

S&P also revised the recovery rating on Kraton to 5 from 4, indicating "modest" recovery (10% to 30%; higher half of the range) if a payment default occurs. Subsequently, it lowered the unsecured issue-level rating to B from B+.

The CreditWatch placement reflects the likelihood that Kraton will acquire Arizona Chemical for $1.37 billion. Kraton will finance the transaction with committed debt facilities.

"We anticipate this transaction could result in weaker pro forma leverage measures, which could lead to a lower rating," S&P credit analyst Allison Czerepak said in a news release.

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