S&P assigns BB issue-level rating and '3' recovery rating to LP's proposed US$300M senior unsecured notes due 2020, expects company to maintain 'strong' liquidity
May 8, 2012
– Standard & Poor's Ratings Services said today it assigned its 'BB' issue-level rating and '3' recovery rating to U.S.-based Louisiana-Pacific Corp.'s proposed $300 million senior unsecured notes due 2020. The '3' recovery rating indicates our expectations for meaningful (50% to 70%) recovery in the event of a payment default. We expect the company to use proceeds to repay its 13% senior secured notes due 2017 and for general corporate purposes.
Louisiana-Pacific is a leading manufacturer of building materials with operations in the U.S., Canada, and South America. Our corporate credit rating on the company is unchanged and continues to reflect our opinion that the company will maintain its "strong" liquidity until end markets recover sufficiently to support meaningful improvement in credit measures, which are currently very weak relative to our assessment of the company's financial risk as "significant". Our assessment of the company's business risk as "fair" reflects our view that Louisiana-Pacific has good operating leverage and that profitability will improve quickly when the nation's housing recovery accelerates, which we expect will begin this year. (For the complete corporate credit rating rationale, see the full analysis published March 29, 2012, on RatingsDirect.)
RELATED CRITERIA AND RESEARCH
Corporate credit rating BB/Negative/--
$300 mil sr unsecd nts due 2020 BB
Recovery rating 3
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