May 16, 2007. /Lesprom Network/. Standard & Poor's Ratings Services said on May 15, 2007 that it lowered its corporate credit rating on pulp and lumber producer Pope & Talbot Inc. to 'CCC+' from 'B-' and its senior unsecured debt rating to 'CCC-' from 'CCC'. The rating outlook is negative. "The downgrade reflects the company's weak consolidated operating performance during the first quarter of 2007 and our expectation that this trend will continue during the next several quarters," said Standard & Poor's credit analyst Andy Sookram. Specifically, Pope & Talbot's pulp segment recorded a 45% decline in EBITDA due to a railroad strike in Canada, quality issues at certain mills, planned maintenance shutdowns, a decline in quality of wood chips, and lower volume amid a record-high industry pricing environment. In addition, the wood segment generated negative EBITDA of $4.5 million, reflecting lower selling prices and volume associated with the weak housing market in the U.S., as well as the Canadian railroad strike. "As a result, we expect Pope & Talbot's liquidity position to remain very constrained throughout 2007," Mr. Sookram said, "limiting the possibility for an outlook change to stable. We could lower the ratings if liquidity continues to decline because of weaker-than-expected pricing for lumber, high costs, or unusual events, including the refusal by banks to amend or waive the minimum EBITDA covenant). Pope & Talbot does not expect to be in compliance with the minimum $30 million EBITDA for the four quarters ending June 30, 2007, because of expectations for continued weak pricing environment in the lumber markets, issues of raw material cost and availability in the pulp business, and maintenance and mechanical issues at certain mills. The company indicated that it is in discussion with its bank group regarding covenant relief. Pope & Talbot is a pulp and wood products company. The company is based in Portland, Oregon and trades on the New York Stock Exchange. Pope & Talbot was founded in 1849 and produces pulp and softwood lumber in the U.S. and Canada. Markets for the company's products include: the U.S.; Europe; Canada; South America; Japan; and other Pacific Rim countries.