S&P lowers Waddington

Standard & Poor's said it lowered its corporate credit and senior secured bank loan ratings on Waddington North America Inc. to CC from B-. All ratings remain on CreditWatch with negative implications, where they were placed on Feb. 18.

The CreditWatch placement followed the company's disclosure that it was in violation of the financial covenants in its bank credit agreement.

S&P said the downgrade reflects Waddington's significantly constrained liquidity because of ongoing operating challenges. The breach of financial covenants is important because it restricts Waddington's access to its revolving credit facility and prohibited the company from making the recent interest payment due on its $45 million senior subordinated notes.

The company will have a grace period to cure the missed interest payment situation before it becomes an event of default under the indenture. However, Waddington's ultimate ability to make the payment is subject to ongoing negotiations with its senior lenders regarding amendments to the covenants in its bank credit facility.

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