S&P puts three paint manufacturers on negative watch

Standard & Poor's placed its ratings on Millennium Chemicals Inc. (BB-), Valhi Inc. (BB), Sherwin-Williams Co. (A+/A-1) and subsidiaries on CreditWatch with negative implications following the jury verdict in Rhode Island finding the companies liable for creating a public nuisance by making lead-based paints decades ago.

The CreditWatch listing reflects both the considerable uncertainties with respect to the final resolution of this litigation and the potential negative implications for the defendants, given that possible damages could be substantial, the agency said. Some estimates have placed the number of homes affected by lead paint in Rhode Island in the range of 200,000 to 300,000 and cleanup costs of $2 billion to $3 billion.

Moreover, S&P said the prospect of a lengthy legal process and further litigation could result in an overhang on the defendants' flexibility to address investment opportunities and to access the capital markets.

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