S&P rates Appleton term loan BB

Standard & Poor's said it affirmed its ratings on Appleton, Wis.-based Appleton Paper Inc. and assigned its senior secured BB bank loan rating to Appleton's new $140 million term loan D.

The outlook remains stable.

"The affirmation follows Appleton's announcement that it has acquired BemroseBooth by acquiring all the shares of Bemrose Group Ltd. for about $60 million," said S&P credit analyst Pamela Rice.

BemroseBooth, based in Derby, England, has about $100 million in annual revenues. It is a leading U.K. provider of secure and specialized print services whose products include security printed vouchers and payment cards as well as mass transit and car parking tickets. The transaction broadens Appleton's security product line and geographic diversity and helps offset declining carbonless paper sales without significantly increasing debt leverage.

The new term loan D has minimal quarterly amortization before its November 2006 maturity. Proceeds will be used to finance the BemroseBooth acquisition and fully repay the company's term loan C. Like Appleton's revolving credit facility and term loan A, term loan D will be secured by substantially all assets.

S&P said the ratings reflect Appleton's aggressive financial profile, limited product diversity, declining carbonless paper volumes, and high customer concentration, partially offset by limited competition in certain specialty paper markets, a fairly stable cost base, and reliable cash flows.

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