S&P: Riverside Forest developing

Standard & Poor's said it placed its B+ long-term corporate credit and senior unsecured debt ratings on Riverside Forest Products Ltd. on CreditWatch with developing implications following the company's announcement that it would reject an unsolicited takeover offer from privately held Tolko Industries Ltd.

"The ratings could be lowered, raised, affirmed, or withdrawn depending on how the situation evolves," said S&P credit analyst Daniel Parker. "Riverside's unsecured notes contain a provision that requires the company to make an offer to repurchase all the outstanding notes in the event of a change of control. It is unclear whether Tolko's offer will be successful and what the effect will be on the outstanding notes."

S&P said the ratings on Riverside reflect its narrow product concentration in cyclical wood products, its vulnerability to foreign exchange risk, and its acquisition strategy. Partially offsetting these risks are the company's low-cost position in the manufacturing of lumber and plywood, some vertical integration in fiber and energy, and good liquidity.

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