S&P puts Lucite on developing watch

Standard & Poor's said it placed Lucite International Group Holdings Ltd.'s BB long-term corporate credit rating and Lucite International Finance plc's B+ senior subordinated debt rating on CreditWatch with developing implications in light of the planned sale of Lucite by its owner, Charterhouse.

S&P said the CreditWatch status reflects the uncertainty at this stage regarding the sale process and the fact that Lucite's financials could be weakened if leverage increases markedly or enhanced if it is sold to a stronger group that would integrate and refinance Lucite.

Lucite could be attractive to a trade buyer, the agency said, as it has leading positions by far in its main product, methacrylate monomers. Lucite has about 38% of the "merchant" market (products sold externally, in contrast to products used internally) and contributes 25% of world production. It is also a strong player in the downstream-acrylics market (40% of revenues) and has a new patented technology (alpha process) that, if delivering as promised, will substantially reduce costs and be a real competitive advantage, S&P said.

The agency plans to resolve the CreditWatch in the second quarter of 2006.

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