S&P: MEGA Brands on watch

Standard & Poor's said it placed its BB- long-term corporate credit and bank loan ratings on MEGA Brands Inc. on CreditWatch with negative implications.

The bank loan's 2 recovery rating was also placed on CreditWatch, the agency said, adding that the CreditWatch placement and the possibility of a subsequent downgrade reflect concerns that revenues, earnings and credit protection measures at MEGA Brands did not meet S&P's forecast for 2006 and could remain weaker than expected in 2007 due to challenges the company faces.

According to S&P, MEGA Brands has been involved in litigation relating to its Magnetix product, which resulted in product recalls, product replacement and product liability settlement expenses.

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