S&P puts U.S. Corrugated on positive watch

Standard & Poor's said it placed the B corporate credit and issue ratings on U.S. Corrugated Inc. on CreditWatch with positive implications.

The CreditWatch placement follows news that the privately held company entered into an agreement under which KapStone Paper and Packaging Corp. would acquire the stock and most of U.S. Corrugated's assets for $330 million, S&P said.

The transaction could have positive rating implications given that the combined company could have lower leverage than U.S. Corrugated currently on a standalone basis, based on KapStone's publicly disclosed financing plan, the agency said.

S&P said it expects that the transaction, which is expected to close in October 2011, could trigger customary change of control provisions under the terms of the company's senior secured notes.

The agency said it assumed that U.S. Corrugated's senior unsecured notes will be retired at or near the close.

The CreditWatch will be resolved at the close of this transaction, S&P said.

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