S&P lowers Chem Rx

Standard & Poor's said it lowered its ratings on Chem Rx Corp., including its corporate credit rating, which was lowered to CCC from B-.

At the same time, the agency said it removed the company from Creditwatch with negative implications, where it was placed on Oct. 15, to reflect its growing concern with the company's ability to operate within the tightening financial covenants of its credit facility, given its growing selling, general, and administrative expenses versus 2007.

The outlook is negative.

Following the company's reported Sept. 30 results, the agency said it believes that the CCC corporate credit rating better reflects the likelihood that the company could violate its financial covenants in the near-term without an amendment to its credit agreement, capital infusion, or significant improvement in its operations.

Although ongoing revenue and gross profit improvements could encourage lenders to provide covenant relief, difficult credit markets and the company's declining to flat EBITDA could make it difficult and expensive to obtain an amendment to its credit agreement, the agency noted.

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