S&P rates Ainsworth notes B+

Standard & Poor's said it raised its long-term corporate credit rating on Ainsworth Lumber Co. Ltd. to B+ from B- due to a strong financial performance and a strengthened balance sheet following completion of the company's proposed refinancing. At the same time, S&P assigned its B+ senior unsecured debt rating to Ainsworth's proposed US$200 million notes maturing in 2014.

The outlook is stable.

"The upgrade stems from Ainsworth's strengthened balance sheet following strong profitability and cash generation in a year of record demand and pricing for oriented strandboard (OSB)," said S&P credit analyst Clement Ma.

Using a combination of about C$194 million cash and the new senior unsecured notes, Ainsworth is expected to retire its US$281.5 million in existing secured debt through a public tender offer. Following the refinancing, the company's total debt to capitalization should eventually decrease to less than 45% from about 67% at Dec. 31.

S&P said the ratings on Ainsworth reflect the company's narrow product concentration in the production of OSB, and its mid-size market position. These risks are partially offset by the company's strong cost position stemming from its modern asset base, and its high fiber integration.

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