S&P rates Wood Resources notes B-

Standard & Poor's said it assigned a B- corporate credit rating to Wood Resources LLC and a B- senior secured debt rating with a recovery rating of 2 to the company's proposed $75 million second-lien senior secured floating-rate notes due 2013, which are co-issued by Wood Resources and its subsidiary, Wood Resources Finance Corp. The outlook is stable.

Proceeds from the debt offering will be used to refinance existing debt, prefund $12 million of capital expenditures over the next two years and modestly increase cash balances.

S&P said the ratings reflect Wood Resources' small revenue and earnings base, thin free cash flows, limited product and geographic diversity and volatile revenues and earnings due to exposure to the cyclical U.S. residential construction market.

These risks outweigh the benefits of manufacturing facilities located near fiber sources and end customers and relatively stable demand for the company's specialty plywood products, the agency said.

Total debt to 2005 EBITDA is almost 5x, but S&P said leverage is expected to improve in 2006 because of stronger earnings from higher sales volumes.

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