S&P rates Panolam loans B+, B-

Standard & Poor's said it assigned its B+ bank loan rating and 2 recovery rating to Panolam Industries International Inc.'s proposed first-lien $20 million revolving credit facility and $130 million term loan B. S&P also assigned its B- bank loan rating and 5 recovery rating to the company's proposed $75 million second-lien term loan C.

The company's B+ corporate credit rating was affirmed. The outlook is stable.

Panolam plans to use proceeds of the proposed bank loans to pay a $64 million dividend to its shareholders - private equity sponsor The Carlyle Group and company management - and to refinance $140 million of existing debt.

S&P said the ratings on Panolam reflect the company's exposure to the cyclicality of residential and commercial new construction and remodeling activities, volatile raw-material costs, limited product diversity and a highly leveraged capital structure.

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