S&P cuts Wellman to CCC+

Standard & Poor's said it lowered the corporate credit rating on Wellman Inc. to CCC+ from B- and placed its ratings on CreditWatch with developing implications following the company announced it would explore strategic alternatives.

S&P said the downgrade reflects the deterioration in Wellman's financial profile, especially in the third quarter, following ongoing weakness in key markets for polyethylene terephthalate resin and polyester staple fiber.

The agency said it is also concerned that the ongoing weakness in these markets may further erode the financial profile and constrain liquidity needed to meet Wellman's onerous interest burden.

The company's total adjusted debt-to-EBITDA ratio was about 15 times at June 30, S&P said.

Moody's lowers Wellman notes to B3, Caa3

Moody's Investors Service said it downgraded Wellman, Inc.'s corporate family and probability-of-default ratings to Caa2 from B3, its $185 million first-lien term loan due 2009 to B3 (LGD2, 29%) from B1 (LGD2, 32%) and its $265 million second-lien term loan due 2010 to Caa3 (LGD5, 79%) from Caa1 (LGD5, 78%).

The downgrade reflects recent deterioration in operating results and potential problems if the company is unable to refinance its first-lien term loan due 2009, the agency said.

The outlook remains negative.

According to Moody's, the negative outlook reflects uncertainties about Wellman's ability to improve its low margins and sufficiently reduce debt with free cash flow and asset sales, maintain sufficient levels of availability under its revolving credit facility and refinance its first-lien term loan due 2009.

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