On Dec. 5, 2008, Standard&Poor's Ratings Services placed all of its ratings, including its 'BB-' corporate credit rating, on Appleton Papers Inc. on CreditWatch with negative implications. The CreditWatch placement follows Appleton's weaker-than-expected operating performance during the nine months ended Sept. 30, 2008, which was a result of lower sales volume in certain segments, higher input costs, and start-up costs associated with its West Carrollton mill upgrade. The EBITDA cushion under its 4.5x maximum allowable total leverage ratio under its bank credit facilities has narrowed as a result. Although the mill upgrade was completed at the beginning of fourth-quarter 2008 and production is ramping up, we believe that the weak economy could lead to a further decline in
