S&P cuts Solo Cup

Standard & Poor's said it lowered Solo Cup Co.'s corporate credit rating to B- from B and removed the ratings from CreditWatch, where they were placed with negative implications in August.

The outlook is negative.

The downgrade was prompted by a weak earnings trend in 2010, negative free cash from operations, limited liquidity, as well as concerns about the company's ability to absorb additional raw material cost volatility, S&P said.

The ratings also reflect the company's highly leveraged financial profile with less than adequate liquidity, negative free operating cash flow, and leverage of 7.5x, excluding debt-like convertible participating preferred stock, the agency said.

This overshadows the company's market positions, as well as ongoing restructuring actions to improve the company's cost position, S&P said.

The agency said it characterizes Solo's business risk profile as weak and its financial risk profile as highly leveraged.

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