S&P puts Radnor on negative watch

Standard & Poor's said it placed its ratings, including its B+/negative corporate credit rating, on Radnor Holdings Corp. on CreditWatch with negative implications based on concerns about Radnor's near-term liquidity and sub-par financial profile, pending completion a proposed initial public offering of stock.

S&P said the CreditWatch placement follows Radnor's announcement that it has acquired Polar Plastics Inc. Polar is engaged in the manufacturing and sale of plastic cutlery, tumblers, and injection molded thermoformed custom plastic products.

The predominantly debt-financed acquisition of Polar for $28.7 million will initially place additional pressure on the company's already stretched financial profile, and will likely result in a modest reduction of near term liquidity.

As of Sept. 26, 2003, cash and availability after borrowing base calculations was about $13 million under its revolving credit facilities. However, the company recently filed a registration agreement for a proposed IPO with expected net proceeds of about $55 million to be used to pay down a portion of the term loan and revolving credit facility.

The completion of the IPO is key for preserving sufficient liquidity and supporting Radnor's growth plans in the polypropylene drink cup segment. If Radnor successfully executes the proposed IPO in the next few months, S&P said it will likely affirm its B+ corporate credit rating on the company and remove the ratings from CreditWatch.

Based on current information, the outlook will likely be stable to reflect expectations for improved liquidity and operating performance beyond 2003.

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