S&P upgrades Reichhold, rates notes CCC+

Standard & Poor's said it raised the rating on Reichhold Industries Inc. to B- from D.

The agency also said it assigned a CCC+ rating to Reichhold's $206.6 million senior secured notes due 2017 with a recovery rating of 5, indicating 10% to 30% expected recovery in a default.

The outlook is stable.

The upgrade reflects Reichhold's credit profile following the completion of an exchange offer, S&P said.

While the exchange did not reduce leverage, the payment-in-kind feature of the newly issued notes increases the company's financial flexibility and cash flow, the agency said.

The company remains highly leveraged and debt is expected to increase over the next two years as a result of the payment-in-kind interest payments, S&P said.

Nevertheless, the agency said it expects Reichhold's operating performance will improve over the next year, as key transportation and construction end markets gradually recover and the company benefits from recent cost cuts.

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