S&P downgrades Varel

Standard & Poor's said it lowered its corporate credit rating on Varel Funding Co. to B- from B and removed ratings from CreditWatch where they were placed with negative implications on Sept. 19 because of concerns about the company's liquidity following Lehman Brothers Holdings Inc.'s bankruptcy filing.

Lehman was the sole lender on Varel's $20 million revolving credit facility.

The agency lowered Varel's senior secured debt rating to B from B+ and kept the recovery rating at 2.

The outlook is negative.

"The downgrade primarily reflects the company's limited liquidity and our concern that, in light of difficult credit markets, it may not be able to replace the $20 million facility," S&P analyst Kenneth Cox said in a statement.

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