S&P lowers Potlatch

Standard & Poor's said it lowered the rating on Potlatch Corp.'s 6.95% debentures to BB from BBB- and revised the recovery rating to 3, which indicates 50% to 70% expected recovery in a default, from 1.

The agency also said it affirmed its BB corporate credit rating.

The outlook is stable.

The downgrades and affirmation follow Potlatch's entry into a new $250 million unsecured revolving credit facility and reflect the release of collateral securing the debentures according to the company's latest 8-K report, said Tobias Crabtree, a S&P analyst said.

The BB rating for the 6.95% debentures is in line with the BB corporate credit rating on the company and notching guidelines for a 3 recovery rating.

The ratings reflect the company's fair business risk, cyclical earnings and cash flow and modest geographic diversity, the agency said.

The ratings also consider Potlatch's significant financial risk, given the company's leverage over the next several quarters will decline to 4x or below, S&P added.

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