Applied Extrusion Technologies Affirmed, Off S&PWatch.NEW YORK--(BUSINESS WIRE)--Oct. 30, 1998--Standard & Poor's today affirmed its single-`B'-plus corporate credit rating on Applied Extrusion Technologies Inc. and its single-`B' rating on the company's $150 million senior notes. Both ratings were removed from CreditWatch, where they were placed Aug. 10, 1998. The rating outlook is stable. The CreditWatch placement followed an unsolicited un·so·lic·it·ed adj. Not looked for or requested; unsought: an unsolicited manuscript; unsolicited opinions. unsolicited Adjective offer by privately held Huntsman Packaging Corp. (double-`B'-minus/Negative/--), which was subsequently rejected by Applied Extrusion. Ratings on Applied Extrusion reflect a below-average business position, thin cash flow coverages, and an aggressive financial policy. Applied Extrusion, a leading oriented polypropylene polypropylene (pŏl'ēprō`pəlēn), plastic noted for its light weight, being less dense than water; it is a polymer of propylene. It resists moisture, oils, and solvents. (OPP OPP Opposite OPP Opportunity/Opportunities OPP Office of Pesticide Programs OPP Ontario Provincial Police (Ontario, Canada) OPP Office of Polar Programs (National Science Foundation) ) films producer in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , has completed a $100 million expansion that increased its packaging film capacity by over 60% and enhanced its manufacturing cost advantage. The company recently entered into a letter of intent to acquire the worldwide films of Montell N.V., a step that would more than double its OPP capacity. While OPP films are used mostly in relatively recession-resistant applications, like food packaging, overcapacity o·ver·ca·pac·i·ty n. Too great a capacity for production of commodities or delivery of services in relation to actual need: the problem of overcapacity in many large industries. has significantly weakened pricing flexibility. The company has responded with a number of cost-cutting programs. These initiatives, coupled with potential synergies and economies of scale from the proposed acquisition, should somewhat mitigate the effects of persistent weak market conditions. Still, pressure on profitability and cash flow levels likely will extend over the intermediate term as additional industry capacity expansions come onstream. Lower cash flows and higher capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. through 1998 preclude further debt reduction. Therefore, profitability and cash flow are not expected to regain the peak levels attained in 1995 for some time. For the near term, funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. to debt is expected to be around 10%. OUTLOOK: STABLE Ratings stability is provided by expectations that the proposed Montell acquisition will somewhat strengthen the firm's competitive profile and that the company will limit debt-financed acquisitions until it has restored its financial profile, Standard & Poor's said. --CreditWire |
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