S&P rates Esselte notes B

Standard & Poor's said it assigned its BB- corporate credit rating to office supplies manufacturer Esselte Group Holdings AB and assigned its B rating to the company's €130 million senior subordinated notes due 2011.

Proceeds of the notes will be used to make an intercompany loan to Esselte Sverige AB to fully repay existing mezzanine debt. They will also be used for a follow-on loan to Esselte AB (the operating company) to repay a portion of the term loans on its existing senior credit facilities, plus associated transaction fees and expenses.

The outlook on Esselte Group Holdings is stable.

S&P said the newly assigned ratings reflect Esselte's constrained discretionary cash flow, its highly competitive operating environment, and the low-growth niche market in which it operates. These factors are mitigated by Esselte's leading market positions in each of its core product lines, its diversified revenue base and distribution channels, its high operating efficiency, and stable cash flows.

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