Moody's raises Pep Boys outlook

Moody's Investors Service raised its outlook on The Pep Boys - Manny, Moe and Jack to positive from stable, affecting $500 million of debt, including the senior unsecured debt at B2.

Moody's said it lifted the outlook in response to the turnaround in merchandise comparable store sales and consolidated profitability following the completion of the company's Profit Enhancement Plan.

"Should these improvements be sustained and enhanced, Pep Boys' ratings could experience upward pressure," Moody's said.

The confirmation of the existing ratings reflects The Pep Boys' national franchise and service capabilities as well as the operating and financial challenges faced in the past two years, its relatively high adjusted leverage and the intense competition in its heavily fragmented industry.

S&P downgrades Brightpoint's ratings

Standard & Poor's lowered Brightpoint Inc.'s corporate credit rating to B+ from BB-, $380 million zero coupon liquid yield option notes due March 11, 2018 to B- from B and $175 million secured multi-currency revolver due June 23, 2002 to BB- from BB. The downgrades reflect a net loss from continuing operations for the quarter ending March 31.

The ratings reflect the company's leading position as a distributor and provider of logistic services. In addition, according to S&P, ratings are affected by lower consumer demand and lower near-term growth prospects for the company. Revenues for the first quarter were $339 million, down 4% from the same period last year. The company reported a net loss of $1.9 million.

"While Brightpoint's profitability in 2002 is expected to benefit from restructuring and cost-reduction actions, near-term profitability is expected to be weak," S&P said. "The current rating reflects Standard & Poor's expectation that Brightpoint will restore positive EBITDA in the second quarter of 2002 and that profitability will improve sequentially during 2002. Availability under a $90 million bank facility provides adequate near term liquidity. The rating also incorporates the expectation that the company will adequately address potential near-term maturities."

S&P takes Echo Bay off watch

Standard & Poor's confirmed its ratings on Echo Bay Mines Ltd. and removed it from CreditWatch with negative implications. The outlook is stable. Ratings affected include Echo Bay's corporate credit at B-.

S&P said its action follows the completion of a share exchange.

S&P said it first put Echo Bay on watch pending the company's ability to secure a replacement credit facility when the previous bank facility expired in October 2001. It obtained a new credit facility for $17.0 million in revolving credit and $4.0 million in letters of credit.

On April 3, 2002, Echo Bay said it had completed an exchange of its outstanding capital securities and the related accrued interest obligation for 361.6 million common shares.

The successful completion of the transaction eliminates the major concern regarding the company's ability to pay the accrued interest of about US$80 million, which would have become due March 31, 2003, S&P added.

The current ratings reflect Echo Bay's below-average business position as a North America-based, midsize gold producer that has had to contend with the challenges of operating in the difficult gold pricing environment. In reaction to the low gold prices, the company has limited its exploration and development expenditures, which has dampened prospects for future production and reserve growth, S&P said.

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