Jefferson Smurfit, the Irish paper and packaging company, has been hit with a credit rating downgrade after it disclosed that it was issuing €300m ($396.4m) of bonds to fund a dividend payment to its shareholders, US-based private equity group Madison Dearborn Partners.

Madison Dearborn paid $3.7bn for Jefferson Smurfit in September 2002, in what is still one of the largest leveraged buyouts on record in Europe. The company owns 91% of the equity, with management - including 350 individual managers and members of the Smurfit family - owning 9%.