S&P downgrades Radnor

Standard & Poor's said it lowered Radnor Holdings Corp.'s corporate credit rating to CCC- from CCC+ and its senior unsecured notes to CC from CCC-. All ratings remain on CreditWatch with negative implications, where they were placed on Nov. 20, 2003.

The CreditWatch initially reflected the company's debt-financed acquisition of Polar Plastics Inc., but has focused subsequently on Radnor's deteriorating financial performance and business challenges, the agency said.

S&P said the downgrade reflects increased financial risk arising from a decline in earnings and cash flow in the past several quarters and from Radnor's inability to meaningfully improve its already weak liquidity ahead of roughly $10 million in interest payments due within the next month. The agency remains concerned that subsequent pressure on profitability and cash flow in the fourth quarter of 2005 could heighten liquidity concerns or at least forestall the necessary improvements to support the previous ratings.

Radnor remained very highly leveraged at Sept. 30, the agency said, with total debt to EBITDA near 12x and funds flow from operations to total debt negligible.

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