Fitch Downgrades Smurfit-Stone's (SSCC) Issuer Default Rating (IDR) and Debt Ratings

January 15, 2009 2:26 PM EST

Fitch Ratings has downgraded Smurfit-Stone Container Corporation's (Nasdaq: SSCC) Issuer Default Rating (IDR) and debt ratings as follows:

--IDR to 'C' from 'B'; Secured bank debt to 'CCC/RR1' from 'BB/RR1'; Senior unsecured debt to 'C/RR4' from 'B/RR4'; Preferred stock to 'C/RR6' from 'CCC+/RR6'.

The Ratings have been placed on Watch Negative.

The ratings downgrades have been prompted by concerns that SSCC may seek bankruptcy protection imminently, precipitated by a sudden decline in business conditions in the fourth quarter of 2008, yet to be reported. Industry-wide containerboard mill operating rates and production have fallen rapidly while inventories have grown, and SSCC's liquidity was low at the start of the quarter, $178 million in unused bank credit plus cash. SSCC is highly leveraged, and its principal credit facilities come up for renewal in November of 2009.

Smurfit-Stone Container Corporation is an integrated manufacturer of paperboard and paper-based packaging in North America, including containerboard and corrugated containers, and is also a paper recycler. [SM]

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