S&P lowers Michelina's

Standard & Poor's said it lowered its corporate credit and senior secured loan ratings on Michelina's Inc. to B from B+.

At the same time, the agency said it removed all ratings from CreditWatch, where they were placed with negative implications on Dec. 1, 2006, reflecting at that time weaker-than-expected operating performance and limited cushion under credit facility covenants.

The outlook is stable.

The agency added that the downgrade was based on weaker-than-expected performance in fiscal 2006, our expectations for limited sales and EBITDA growth in 2007 and a more aggressive financial policy as the company is expected to increase shareholder distributions.

According to S&P, the ratings on Michelina's reflect its moderately high debt levels, more aggressive financial policy, narrow product portfolio and the highly competitive frozen-entrée category in which the company competes.

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