S&P: Ainsworth Lumber on watch

Standard & Poor's said it placed its B+ long-term corporate credit and senior unsecured debt ratings on Ainsworth Lumber Co. Ltd. on CreditWatch with negative implications.

The CreditWatch placement follows the company's announcement that it will purchase all of Potlatch Corp.'s oriented strandboard (OSB) manufacturing and related facilities for $457.5 million.

"This is very large transaction for Ainsworth and we will take a look at the affect of additional debt in a less robust pricing environment, as it is unlikely that the current high OSB prices will be sustained through 2005," said S&P credit analyst Daniel Parker.

"Although the deal would improve Ainsworth's product diversity and geographical balance, we are concerned about the Potlatch assets' effect on Ainsworth's overall cost position and the credit ratings could be lowered."

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