Avenor's 'BB+' Rtgs Afmd, Off S&PWatch; Outlook Stable.TORONTO--(BUSINESS WIRE)--S&P's CreditWire 6/12/97--Standard & Poor's today has affirmed its double-'B'-plus corporate credit rating and senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. rating on Avenor Inc. and has removed the ratings from CreditWatch where they were placed on Dec. 18, 1996. About US$500 million of rated debt is affected. The outlook is stable. The rating affirmation follows the vote by Avenor's shareholders to reject the proposed amalgamation amalgamation /amal·ga·ma·tion/ (ah-mal´gah-ma´shun) trituration (3). amalgamation ( with highly levered Repap Enterprises Inc., and the expectation that Avenor will not pursue individual Repap assets now that Repap is considering asset sales. In addition, the likelihood of a successful three-way merger proposed by Domtar Inc. (double-'B'-plus/Watch, Negative) with Avenor and Repap appears to be greatly reduced. The ratings on Montreal-based Avenor, a major newsprint newsprint low grade paper used for newspapers. Old newspapers are fed to cattle as an alternative roughage and may occasionally be ingested by dogs. Significant amounts of lead are accumulated in tissues; no cases of poisoning have been recorded in cattle, though it has been and market pulp producer, reflect a somewhat weaker than average business profile and an improving capital structure. Avenor operates large, cost efficient facilities, enjoys a fair degree of fiber self-sufficiency, and is fully integrated in terms of pulp. This is offset by a fairly narrow, commodity-oriented business mix focused on two very cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. products. While the potential sale of a pulp mill A pulp mill is a manufacturing facility that converts wood chips or other plant fiber source into a thick fiber board which can be shipped to a paper mill for further processing. and a 51% interest in a lumber lumber, term for timber that has been cut into boards for use as a building material. The major steps in producing lumber involve logging (the felling and preparation of timber for shipment to sawmills), sawing the logs into boards, grading the boards according to company would narrow Avenor's product mix, it would allow the company to permanently reduce debt, permitting total debt to capital to average about 40% through the industry cycle. OUTLOOK: Stable. While cash flow protection measures should continue to fluctuate, reflecting the cyclical nature of newsprint and pulp prices, they should remain adequate for the rating category, Standard & Poor's said.---CreditWire CONTACT: Blaise Ganguin, Toronto (1) 416-202-6007 |
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