S&P rates new Sweetheart Cup notes CCC

Standard & Poor's said it raised its ratings on Owings Mills, Md.-based Sweetheart Cup Co. Inc. and assigned its CCC senior secured debt rating to the company's offering of $100 million 9.5% senior secured notes due 2007.

The outlook is stable.

"The upgrade follows the company's closing on debt refinancing that significantly improves its debt maturity profile," said S&P credit analyst Cynthia Werneth.

S&P said there are now no major debt maturities before 2007. Total debt outstanding as of Sept. 30 (including capitalized operating leases and parent company obligations) was nearly $800 million. If this financing had not been completed by year-end, Sweetheart's bank credit facility would have matured on Dec. 31.

In addition to the $100 million senior secured notes, the company issued $20 million of junior subordinated notes due in 2008 to International Paper Co., a major supplier. Proceeds of both issues will be used to redeem in January 2004 all $93.8 million of Sweetheart's 12% senior unsecured notes maturing in July 2004 and to repay a portion of its senior secured credit facility.

S&P said the ratings reflect a very aggressive financial profile that overshadows the company's position as a leading provider of paper and plastic food service items.

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