S&P cuts Terphane view to negative

Standard & Poor's said it revised its outlook on Terphane Holding Corp. to negative from stable while all the ratings on the company, including the CCC+ corporate credit rating, were affirmed.

"The outlook revision primarily reflects the company's weaker-than-expected liquidity and raw material cost pressures," said S&P credit analyst Robyn Shapiro.

The agency said other factors include the very aggressive financial policies of the company's equity sponsor, Rhone Capital, which took a $26 million debt-financed dividend in March. S&P noted since then, liquidity has continued to weaken.

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 restricted liquidity, the agency said, adding 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 and a low cost manufacturing structure.

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