S&P rates Terphane notes CCC+

Standard & Poor's said it assigned its CCC+ rating to Terphane Holding Corp.'s proposed $30 million senior secured notes, an add-on to the company's existing $46.5 million 12½% senior secured notes due June 2009.

At the same time, S&P affirmed its ratings on the company, including the CCC+ corporate credit, senior secured debt and $30 million senior secured notes ratings.

Proceeds from the proposed notes offering will be used to fund a dividend to shareholders, which S&P said is consistent with the very aggressive financial policies of the company's equity sponsor, Rhone Capital.

Following the transaction, S&P said liquidity will remain weak and will reflect a small cash balance and the expectation that the company could continue to generate negative free cash during the current year as it commences production on a new manufacturing line at its facility in Brazil.

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 restricted liquidity.

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