S&P affirms Sealed Air ratings

Standard & Poor's said it affirmed its existing ratings on Saddle Brook, N.J.-based packaging manufacturer Sealed Air Corp., including its senior unsecured debt at BBB, and removed them from CreditWatch.

This action follows the company's recent announcement that it has completed and signed a definitive settlement agreement with the Committee of Asbestos Personal Injury Claimants and the Committee of Asbestos Property Damage Claimants in the W.R. Grace bankruptcy proceeding.

S&P said the settlement agreement is consistent with the terms of the agreement that was announced in November 2002, and is important in that it removes a material uncertainty related to the credit quality of Sealed Air.

The ratings on Sealed Air Corp. reflect the company's above-average business risk profile and its consistent generation of free cash flows, which are partially offset by its somewhat aggressive financial management.

In July 2003, Sealed Air issued a total of $1.28 billion of senior notes and used the proceeds to redeem its $1.3 billion of outstanding preferred stock (which was considered debt-like by S&P).

S&P said the company's debt levels are high. Its debt as a percentage of total capital was 71% at Sept. 30. Yet, S&P said it expects that the company will limit its spending on growth initiatives and apply its strong free cash flows toward reducing debt for the next couple of years. Thus, funds from operations as a percent of total debt, which is currently weak for the rating at 18%, should trend toward 25%.

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