S&P gives Chesapeake loan BB-

Standard & Poor's said it assigned its BB- senior secured bank loan and 2 recovery ratings to Chesapeake Corp.'s proposed first-lien $125 million revolving credit facility due 2011 and first-lien £140 million term loan B due 2013.

At the same time, the senior unsecured debt rating was lowered to B from B+ because of the increase in priority debt, the agency said.

The company's BB- corporate credit rating and B subordinated debt ratings were affirmed.

The outlook is stable.

S&P noted that the ratings on paperboard and plastics packaging producer Chesapeake reflect its very thin discretionary cash flow, very aggressive debt leverage, industry overcapacity and competitive pricing pressures, adding that the ratings also reflect some ability to pass on raw-material cost increases to customers and the diversity of the company's end markets and operations.

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