S&P keeps American Greetings on watch

Standard & Poor's said its ratings on American Greetings Corp., including the BB+ corporate credit rating, would remain on Creditwatch with negative implications, following the company's announcement on Feb. 27 that it acquired all of the issued and outstanding capital stock of RPG Holding Inc.

At the same time, the senior unsecured notes due June 1, 2016 are still rated BB-, and remain on Creditwatch with negative implications following the company's $22 million add-on to the issue for a total of $222 million, the agency added.

These notes have a recovery rating of 6, indicating that noteholders can expect negligible recovery in the event of a payment default, S&P said, noting that the company also issued about $32.7 million in additional senior notes (unrated) due 2016, and drew down $100 million in principal amount under the BBB-rated $100 million multiple draw term loan feature of its $450 million credit facility, which includes a BBB-rated $350 million revolving credit facility.

"Standard & Poor's originally placed the ratings on American Greetings on Creditwatch with negative implications on Dec. 23, following the company's weaker-than-expected earnings announcement for the third quarter ended Nov. 28," said S&P credit analyst Christopher Johnson.

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