S&P downgrades Merisant

Standard & Poor's said it lowered its ratings on Merisant Worldwide Inc. and its wholly owned subsidiary, Merisant Co., including its corporate credit rating to B from B+ and senior subordinated debt to CCC+ from B-.

The ratings remain on CreditWatch, where they were placed on May 10, 2004.

S&P said the downgrade and CreditWatch listing reflect the company's weaker-than-expected operating performance for fiscal 2004 due to declining sales primarily in its retail channel, a shift in product mix from retail toward lower-margin food service, and increased marketing spending.

In addition, S&P said it expects greater competition from larger, financially stronger competitors, such as Johnson & Johnson (AAA/stable/A-1+) and its "Splenda" brand, which will continue to pressure Merisant's EBITDA margins and credit measures, which were weaker in fiscal 2004.

The CreditWatch listing further reflects concern over Merisant's announcement that it will delay filing of its form 10-K until about April 15, the agency said. The company disclosed that it needs more time to complete its audit and its assessment related to deficiencies in its internal controls over financial reporting.

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