S&P lowers Royster-Clark ratings

Standard & Poor's said it lowered its corporate credit rating on Royster-Clark Inc. to B from B+ and its senior secured debt rating on the company's $200 million first mortgage bonds due 2009 to B- from B.

The rating on the senior secured credit facility is withdrawn because it has been refinanced with a new $225 million borrowing-based, senior secured credit facility due 2006 that is unrated.

The outlook is stable.

S&P said the downgrade reflects the challenging operating environment for agricultural inputs, which has resulted in weak operating performance, and the related impact on Royster-Clark's financial measures. Although the management team has taken steps to improve operating performance by continually looking for operating improvements and better working capital management, S&P said it does not expect that credit protection measures will improve to their previous levels in the near term.

In S&P's view, the ratings reflect Royster-Clark's highly leveraged financial profile and its participation in a highly cyclical and seasonal, commodity-based industry, offset by a defendable market share in its operating region.

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