S&P: Sovereign Specialty positive

Standard & Poor's said it placed its ratings on Sovereign Specialty Chemicals Inc., including its B+ corporate credit rating, BB- senior secured bank loan rating, and B- subordinated note rating, on CreditWatch with positive implications.

S&P said the CreditWatch placement follows the public announcement that Henkel Corp., a U.S. affiliate of Germany-based Henkel KGaA, will purchase Sovereign from majority owner AEA Investors LLC for about $575 million, including the assumption of outstanding debt. The transaction, which is subject to regulatory approval, is expected to close by the end of 2004.

The CreditWatch placement reflects the likely improvement to credit quality if the acquisition by higher-rated Henkel KGaA (A-/stable/A-2) is consummated as proposed. In addition, S&P expects that Sovereign's existing bank debt and subordinated notes could be refinanced upon a material change of control.

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