S&P puts Merrill Corp. on positive watch

Standard & Poor's said it placed Merrill Corp.'s B+ corporate credit rating and B+ senior secured bank loan rating with a recovery rating of 3 on CreditWatch with positive implications.

The CreditWatch listing follows the announcement that Merrill has filed a registration statement with the Securities and Exchange Commission for a proposed initial public offering of its common stock in the amount of $253 million, which includes common stock issuable upon exercise of the underwriters' over-allotment option. The proposed offering will include shares sold by Merrill, as well as by some of Merrill's stockholders including DLJ Merchant Banking Partners II LP.

Proceeds will be used for debt reduction, working capital and other general corporate purposes.

If the IPO closes as expected and proceeds are indeed used to make material levels of debt repayment, S&P said it expects a sustainable improvement in Merrill's leverage profile.

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