S&P rates Merrill revolver B+, loan B

Standard & Poor's said the corporate credit rating on Merrill Corp. remains unchanged at D following the company's plan to refinance its December 2012 and November 2013 debt maturities.

S&P also said it assigned a preliminary B+ rating to the company's proposed $30 million revolving credit facility due 2018 with a preliminary recovery rating of 1, indicating 90% to 100% expected default recovery.

The agency also assigned a B rating to the company's $390 million first-lien term loan due 2018 with a preliminary recovery rating of 2, indicating 70% to 90% expected default recovery.

The company also will be issuing $227 million in new unsecured holding company notes due 2023 in connection with this refinancing, S&P said.

Upon successful closing of the transaction and exchange of the existing $227 million second-lien term loan with the new $227 million unsecured holding company notes, the agency said it will likely raise the corporate credit rating to B- as the transaction will address the company's default on the 2012 maturities and eliminate the risk of any further near term defaults.

The current ratings reflect Merrill's failure to refinance or pay off its $374 million first-lien term loan and $33 million drawn revolver prior to the Dec. 22 maturity, S&P said.

The second-lien term loan also is in technical default because of the cross-default provision in the credit agreement, the agency said.

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