U.S. paper producer Appleton Papers Inc. announced that its planned merger with unrated Hicks Acquisition Co. II Inc. has been terminated due to unfavorable market conditions. It is now less likely that Appleton will quickly reduce leverage without the equity infusion that would have accompanied the previously proposed merger. We affirmed our ratings on the company, including our 'B' corporate credit rating, and removed all ratings from CreditWatch positive. The stable rating outlook is based primarily on our view that Appleton will continue to generate modest positive free operating cash flow and maintain its adequate liquidity profile. On July 16, 2012, Standard&Poor's Ratings Services affirmed its ratings on Appleton, Wis.-based Appleton Papers, including the 'B' corporate credit rating.
