DBRS Assigns BB (high) Rating to New Cascades Inc. Issues

DBRS has today assigned a rating of BB (high) with a Negative trend to the US$300 million senior notes due 2017 and the $150 million senior notes due 2016 (collectively, the Notes) to be issued by way of private placement by Cascades Inc. (Cascades or the Company). The Notes are to be guaranteed by Cascades’ existing and future U.S. and Canadian restricted subsidiaries on a senior unsecured basis. The Notes will not be guaranteed by the Company’s subsidiaries outside Canada and the United States or by any of the Company’s joint ventures, minority investments or unrestricted subsidiaries.

Proceeds from the offering of the Notes are to fund the previously announced tender offer of Cascades Tenderco Inc., a newly formed wholly owned subsidiary of the Company, to purchase up to US$400 million in aggregate amount (the Tender Offer) of the Company’s 7.25% Senior Notes due 2013 (the 7.25% Notes) and the Company’s 6.75% Senior Notes due 2013, with the Tender Offer placing a higher priority on the purchase of the 7.25% Senior Notes.

DBRS notes that the above transactions will serve to extend the maturity profile of the Company’s indebtedness, which DBRS views positively. However, the transactions will not have a material impact on the Company’s financial profile and as such do not warrant any rating action at this time.

DBRS observes that the Company’s operating performance has been improving through 2009 amid still-challenging industry conditions, with debt levels also being reduced. Should the Company be able to continue this improvement over the near term, DBRS may consider taking a positive rating action.

Notes:
The applicable methodologies are Rating the Forest Product Industry and DBRS Rating Methodology for Leveraged Finance, which can be found on our website under Methodologies.

This is a Corporate (Natural Resources) rating.