S&P drops Cognis view to negative

Standard & Poor's said it revised its outlook on Cognis GmbH and related entity Cognis Deutschland GmbH & Co. KG to negative from stable owing to an expected weakening business position in certain end markets.

The B+ long-term corporate rating on Cognis GmbH was affirmed.

The outlook revision reflects S&P's expectation of eroding business prospects for 2005 and thereafter. In particular Cognis may find it challenging to restore its profitability and cash flow generation in line with the B+ rating, owing to a very high leverage, structural changes in several markets, capacity increases by competitors, higher prices for key raw materials (natural oils and petrochemicals), as well as unfavorable currency exchange rates.

S&P currently rates Cognis GmbH's senior secured debt at B-, Cognis Deutschland GmbH & Co. KG's senior secured bank loan (first lien) at B+ and senior secured debt B-, and Cognis Holding GmbH (formerly Cognis Holding GmbH & Co KG)'s senior unsecured debt at B-.

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