S&P: Borden Chemical on watch

Standard & Poor's said it placed its B+ corporate credit rating and other ratings for Borden Chemical Inc. on CreditWatch with negative implications, citing the company's announcement of a sizable acquisition.

The CreditWatch placement follows the company's announcement of an agreement to acquire Bakelite AG from Rutgers AG. Bakelite had sales in 2003 of $610 million. The purchase price is within the range of €175 million to €200 million, subject to certain adjustments. The transaction is subject to regulatory reviews and is expected to close in the first half of 2005.

S&P said the proposed combination would be a meaningful strategic initiative for Borden, as it would broaden the company's product portfolio and technology base, and expand the company's end market and geographic diversification. On a pro forma basis, Borden will have sales of almost $2.1 billion. The company expects to finance the transaction with cash and additional borrowings.

S&P currently rates Borden's senior unsecured debt B- and senor secured bank loan BB-. S&P rates senior second secured notes co-issued by Borden U.S. Finance Corp. and Borden Nova Scotia Finance ULC at B-.

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