American chocolate maker Hershey is facing a second lawsuit challenging plans for the sale of a controlling stake in the firm.

An association for orphan ex-pupils of a school set up by the firm's founder has said it will file a lawsuit on Thursday to try and block the sale.

Hershey, whose brands include such American icons as Reese's Peanut Butter Cups and Hershey's kisses, has been put up for sale by the Milton Hershey School Trust.

Meanwhile, credit ratings agencies said Swiss firm Nestle, one of Hershey's suitors, could lose its top credit rating if it runs up debt to make an offer of more than $10bn.

In Switzerland, Nestle's shares fell more than 4%.

The warning - from Standard & Poor's and Moody's - comes three days after Nestle was reported to be assembling an offer of $11.5bn (�7.5bn) for Hershey.

A spokesman for Nestle said it can afford to pay cash for the US firm and has no need to take on more debt.

Competing bids

Other bidders are thought to include US food giant Kraft and UK firm Cadbury Schweppes.

The Milton Hershey School Trust, a charitable foundation which owns one-third of Hershey shares but controls three-quarters of votes, wishes to sell its stake with the aim of diversifying its holdings.

The Milton Hershey School Alumni Association is objecting that the stake sale fails to take account of the interests of disadvantaged children at the school, which is the sole beneficiary of the Trust.

"You can't have these proceedings hurtling forward without somebody speaking for the children, and right now nobody does," said Ric Fouad, the president of the Association.

It plans to file a suit in the Dauphin County Orphans Court, Pennsylvannia, he said.

A spokesman for the Trust has declined to comment on the filing.

Far-reaching impact

The court is due to hear another case on 3 September brought by the Pennslyvannia attorney general.

He wants the sale blocked, arguing it would cause "irreparable damage" to the town of Hershey.

The threat of legal action surrounding the sale has already led Hershey to postpone its original deadline of Labour Day [Monday 2 September], for bidders to make offers, the Financial Times reported.