S&P: Arclin outlook negative

Standard & Poor's said it revised its outlook on Arclin Canada Ltd. (formerly Dynea Canada Ltd.) to negative from stable and affirmed the company's long-term corporate credit rating at B, its first-lien senior secured debt rating at B+ with a recovery rating of 2 and its second-lien senior secured debt rating at CCC+ with a recovery rating of 6.

The agency said the negative outlook reflects its weak cash flow expectations for the company's resins business, the company's tight liquidity and the likelihood that Arclin will breach its covenant in the next six months.

The ratings on Arclin reflect its highly leveraged capital structure, the cyclical and low-margin commodity resins business and the company's relatively small size compared with its main competitors, S&P said.

These risks are partially offset by a strong market position in the resins and overlays markets, the ability to pass through incremental raw material costs and some product and end-market diversity, the agency added.

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