S&P cuts Tekni-Plex ratings

Standard & Poor's said it lowered its corporate credit rating on Tekni-Plex Inc. to B- from B+ and placed the rating on CreditWatch with negative implications. S&P also lowered Tekni-Plex Inc.'s bank loan rating to B- from B+, senior secured debt to CCC from B-, and subordinated debt to CCC from B-.

This follows the company's announcement that it expects to report a net loss for the fiscal year ended June 30 and consequently breached financial covenants under its credit agreement.

The downgrade reflects significant weakness in the company's operating and financial performance, particularly during the important final quarter of its fiscal year, and constrained liquidity and cash generation, the agency said.

S&P said the company is in discussions with its bank group regarding a waiver and amendment to the financial covenants. Tekni-Plex's ability to obtain an amendment to its credit agreement would be key to preserving short-term liquidity and would add support to the B- corporate credit rating.

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