S&P cuts Catalyst Paper

Standard & Poor's said it lowered the long-term corporate credit rating on Catalyst Paper Corp. to CC from CCC+ and its senior unsecured debt to C from CCC with 5 recovery rating.

Ratings remain on CreditWatch with negative implications, where they were placed June 26.

"The downgrade reflects Catalyst's announcement of an offer to exchange its existing senior unsecured notes with an 8.625% coupon due 2011 for new senior secured notes due 2016 and common shares," S&P analyst Jatinder Mall said in a statement.

The exchange would ease Catalyst's debt burden, the agency noted.

"We will likely lower the ratings on Catalyst to selective default upon completion of the exchange offer, as we view the offer as distressed because it represents a discount on the face value of the existing senior unsecured debt," Mall added.

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