S&P drops American Color notes to D

Standard & Poor's said it lowered American Color Graphics Inc.'s 10% senior secured second-priority notes due 2010 to D from C and lowered its corporate credit rating to SD (selective default) from CC, and removed the ratings from CreditWatch, where they were placed with negative implications July 24.

The downgrades stem from the company's announcement that it received consents from a majority of its 10% noteholders to defer to March 15, 2008, the semi-annual payment of cash interest on the notes, from Dec. 15.

S&P said it considers a default to have occurred when a payment obligation is not made in accordance with the original terms even with investor agreement and when the nonpayment is a function of the borrower being under financial stress.

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