Mar 13, 2007. /Lesprom Network/. Standard & Poor's Ratings Services said on March 12 that it revised its outlook on Chicago-based Smurfit-Stone Container Corp. and its subsidiaries to positive from stable. All ratings, including the company's 'B' corporate credit rating, were affirmed. At the same time, Standard & Poor's assigned its 'CCC+' senior unsecured debt rating to the proposed $675 million senior unsecured notes due 2017 to be issued by Smurfit-Stone's wholly owned subsidiary, Smurfit-Stone Container Enterprises Inc. (B/ Positive/--) under Rule 144a with registration rights. Proceeds from the notes offering are to be used to purchase, through a tender offer, all of the company's $648 million 9.75% notes due 2011. "The outlook revision recognizes the improvement in Smurfit-Stone's debt leverage since the end of 2005 and better containerboard industry fundamentals that should lead to stronger credit metrics over the next year," said Standard & Poor's credit analyst Pamela Rice. "We expect relatively steady market conditions in 2007 and believe the company will realize sizable benefits from its strategic initiatives to reduce costs and improve productivity throughout its mill and corrugated products system. As a result, Smurfit-Stone should generate sufficient free cash flow to further reduce debt and strengthen credit measures to levels that could support a one-notch upgrade. However, the rating action also reflects our caution that an extended period of high fiber costs without additional price increases or a weaker-than-expected U.S. economy could hinder the expected progress." Smurfit-Stone is the largest containerboard producer in North America with about 20% of capacity in a relatively consolidated industry. It is also the largest maker of corrugated containers, with close to 20% of the box market. Ms. Rice said, "We could raise the ratings in the next year or so if the company can permanently improve its cost structure and further reduce its heavy debt burden. We could revise the outlook to stable if market conditions reverse the progress of the last year because of worse-than-expected U.S. economic conditions, price declines, or greater-than-expected cost pressures."