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Kraton Performance Polymers Inc. Message Board

  • dardaaajo dardaaajo Mar 15, 2012 5:27 PM Flag

    Dilutive offering filed today, S&P ratings an issue for me

    I just read S&P's complete report. KRA is taking on more debt to fund a new plant, but according to S&P, "the ratings on Kraton reflect our assessment of the company's business risk profile as weak, and financial risk profile as significant."

    They go on to say that "EBITDA margins could be somewhat weaker for full year 2012 than 2011, given a weak starting point, our expectation for subdued economic conditions the first half of the year, and likely modest recovery in the second half."

    "We also believe that free operating cash flow will be thin or slightly negative the next few years." In other words, it seems to me they're foregoing growth now, in favor of new plant construction that will take years to become operational.

    The bottom line for me is I plan to sell my position tomorrow in KRA, given the new dilutive offering and S&P comments. Now it makes sense that the stock has been marching in place for awhile, unable to overcome major resistance levels.

    If that were to change, I would reevaluate, but I don't see that happening given today's news. I find the analyst's comments who cover the stock just minutia, as I feel they all have a conflict of interest, as they're compensated by the company. Therefore, my actions are completely independent of analysts.

    I don't post very often, best of luck to KRA longs.

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