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S&P might downgrade Lumena
Standard & Poor's said that it placed Lumena Resources Corp.'s BB- long-term corporate rating and the BB- issue rating on the company's senior notes on CreditWatch with negative implications.
The ratings were placed on CreditWatch following Lumena's announcement that it made an offer to the shareholders of Sino Polymer New Materials Co. Ltd. to acquire up to 95% of the equity interest in the company, valued at $1.5 billion.
The size of the transaction brings significant uncertainties in terms of integration and funding arrangements, S&P said. Lumena and Sino Polymer have good margins and are among the leading players in their niche sectors in China; however, S&P expects their margins to attract strong competition, which could lead to margin erosion.
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