S&P rates Terphane notes

Standard & Poor's said it assigned its B- corporate credit rating to Terphane Holding Corp. and assigned its B- rating to the company's proposed $100 million senior secured notes due 2009.

The outlook is stable.

The proceeds from the proposed notes transaction will be used primarily to fund a $65 million dividend to shareholders and repay existing subsidiary debt.

S&P said the ratings on Terphane reflect an extremely limited scope of operations as the sole domestic manufacturer in the niche South American thin polyester film industry, significant reliance on one manufacturing facility, and very aggressive debt leverage.

However, the company's narrow business focus is partially offset by favorable industry growth prospects; regional import tariffs that protect the company's primary market; a low cost, integrated manufacturing structure; well-diversified customer relationships; and stable operating margins.

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