S&P drops Chesapeake

Standard & Poor's said it lowered its ratings on Chesapeake Corp. and placed these ratings on CreditWatch with negative implications.

The corporate credit rating was lowered to B from B+, the agency said, adding that the downgrade and CreditWatch listing reflect EBITDA declines during the past several quarters and its expectations that challenging market conditions could further weaken the company's ability to achieve targeted earnings during the next few quarters, which could pressure the company's ability to comply with financial covenants under its credit agreement.

In addition, the company's plan to refinance its $250 million revolving credit facility due February 2009 has been delayed because of certain issues relating to the Fox River environmental matter, which has created refinancing risk, the agency added.

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