S&P puts SP Newsprint on watch

Standard & Poor's said it revised the CreditWatch implications on SP Newsprint Co.'s ratings, including the BB- corporate credit rating, to negative following significant deterioration in the company's earnings and cash flow due to continued challenging newsprint market conditions as well as higher input costs.

The ratings were initially placed on CreditWatch with developing implications on May 17 following the company's announcement that it is exploring strategic alternatives, including the possible sale of the company.

The company's credit measures have since weakened, and S&P said it expects that credit measures on a rolling-12-month basis are likely to worsen in the near term because pricing continues to deteriorate. The agency is also concerned about the company's ability to meet the financial covenants under its bank loan agreement.

The adjusted debt-to-EBITDA ratio was 2.9x at June 30, compared with 2.2x at March 31.

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