S&P lowers Chesapeake

Standard & Poor's said it lowered its corporate credit rating on Chesapeake Corp. to D from SD.

The downgrade follows Chesapeake's announcement that it is selling its business operations as a going concern to affiliates of Irving Place Capital Management LP and Oaktree Capital Management LP for $485 million through a pre-packaged Chapter 11 bankruptcy filing of Chesapeake and its U.S. subsidiaries, the agency noted.

The company will continue to operate its businesses during the sale and Chapter 11 process, and management expects ongoing business relationships with trade creditors, customers, and employees will not be affected, the agency said.

Importantly, S&P said that the company will seek approval for new debtor-in-possession, up to $37 million provided by certain members of its current bank group, financing that will provide an immediate source of funds, enabling it to satisfy customary obligations including amounts owed to trade creditors, suppliers, customers, and employees in the ordinary course of business.

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