S&P places U.S. Corrugated's B corporate credit, issue ratings on CreditWatch with positive implications following proposed acquisition by KapStone

NEW YORK , September 26, 2011 (press release) – U.S. Corrugated Inc. announced that it had entered into an agreement under which KapStone Paper and Packaging Corp. (unrated) would acquire U.S. Corrugated's stock and most assets for $330 million.

We expect that the transaction could trigger customary change of control provisions under the terms of the company's senior secured notes.

We placed our corporate credit and issue ratings on U.S. Corrugated on CreditWatch with positive implications.

Standard & Poor's Ratings Services said today it placed its 'B' corporate credit and issue ratings on New Jersey-based U.S. Corrugated Inc. on CreditWatch with positive implications.

"The CreditWatch placement follows the recent announcement that the privately held company had entered into an agreement under which KapStone Paper and Packaging Corp. would acquire the stock and most of U.S. Corrugated's assets for $330 million," said Standard & Poor's credit analyst Tobias Crabtree. The transaction could have positive rating implications given that the combined company could have lower leverage than U.S. Corrugated currently on a standalone basis, based on KapStone's publicly disclosed financing plan.

Standard & Poor's expects that the transaction, which is expected to close in October 2011, could trigger customary change of control provisions under the terms of the company's senior secured notes. We assume that U.S. Corrugated's senior unsecured notes will be retired at or near the close.

We will resolve our CreditWatch at the close of this transaction, possibly based on KapStone's publicly filed documents. Illinois-based KapStone is a publicly traded and currently unrated firm.

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