U.S.-based Appleton Papers Inc. announced that it intends to merge with unrated Hicks Acquisition Co. II Inc. In our view, the business combination will enhance Appleton's liquidity profile and will enable the company to repay high cost debt. We are placing our ratings on Appleton, including the 'B' corporate credit rating, on CreditWatch with positive implications. We expect to resolve the CreditWatch on or before the proposed July 2012 closing date, with the potential for a one-notch upgrade if we view it likely that leverage will drop and remain below 5x EBITDA. On May 18, 2012, Standard&Poor's Ratings Services placed its ratings on U.S.-based Appleton Papers, including the 'B' corporate credit rating, on CreditWatch with positive implications. The
