S&P confirms Milacron

Standard & Poor's confirmed its ratings on Milacron Inc. including its senior secured debt at BB- and its senior unsecured debt at B.

S&P said the action follows Milacron's announcement it is selling the Widia Group, its European and Indian metalworking tools operation, to Kennametal Inc. for €180 million (about $170 million).

Most of the sale proceeds will be used to reduce bank debt but Milacron still needs to demonstrate profitability in its core plastics machinery business, S&P said.

The ratings on Milacron reflect an average business risk profile and an aggressive financial profile. Milacron's current profitability has declined materially because of the sharp downturn in North American demand for plastics machinery and metalworking tools; the timing and extent of market recovery remains highly uncertain, S&P commented.

Sales were down year-to-year 25% for plastics processing equipment and 17% for metalworking tools. Management has reduced staffing and cut back production in certain operations. To further conserve cash, inventories are being worked down and capital expenditures reduced. However, debt to total capital and was somewhat aggressive at 63% at Dec. 31, 2001, constraining financial flexibility, the rating agency said.

Moody's confirms Winn-Dixie's ratings

Moody's Investors Service confirmed Winn-Dixie Stores Inc.'s ratings based on the company's strategic plans to exit its unprofitable Texas and Oklahoma operations. The rating outlook remains negative due to the company's challenges in building sales and margins in the competitive market that is dominated by better capitalized companies, Moody's said.

Confirmed ratings include Winn-Dixie's senior implied at Ba1, senior bank agreement at Baa3, long term issuer rating at Ba2, senior unsecured bonds at Ba2 and commercial paper at not prime.

Winn-Dixie is currently negotiating the sale of most Texas and Oklahoma stores and will close any unsold sites. Earnings will increase once the exit is completed and management will be able to focus on market with better potential, Moody's said. However, the company will incur additional charges of about $75 million after-tax, making this the third consecutive fiscal year in which material charges have been incurred to re-position the company. The cash from the property sales and inventory liquidation will total approximately $90 million, exceeding the charges, and, according to the release, the excess cash will most likely be used to reduce debt and/or fund re-investment in the business.

Moody's confirms Varsity Brands

Moody's Investors Service confirmed its ratings on Varsity Brands, Inc. including its $15 million senior secured revolving credit facility due September 2002 at B1 and $66 million 10.5% senior notes due 2007 at B2. The outlook is stable.

Moody's said the confirmation completes a review for possible downgrade begun last year and follows Varsity's use of all $70 million proceeds from the sale/exit of the team sports and licensing businesses towards debt reduction.

The rating action also reflects the steady operating performance of the remaining business segments (uniforms, camps and events), particularly in a difficult economic environment, Moody's said.

Sales for the year ended December 2001 were up over 8% from the prior year and operating margins improved around 30 basis points to 9.5% from 9.2%. In combination, the debt reduction and improved core operations resulted in pro-forma credit statistics that compare favorably to other issuers in Varsity's rating category. Interest coverage is approximately 1.9x on an EBITA basis (2.2x on an EBITDA basis); total debt is around 4.6x EBITA (4.1x EBITDA); and retained cash flow is over 10% of total debt, Moody's said.

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."

Moody's upgrades Correction Corp.

Moody's Investors Service upgraded Corrections Corp. of America, affecting $1.1 billion of debt. Ratings affected include Corrections Corp.'s senior secured debt, raised to B1 from B2, senior unsecured debt, raised to B2 from B3, and preferred stock raised to Caa1 from Caa2. The outlook is stable. Moody's also assigned a B2 rating to its new $250 million 9 7/8% senior unsecured notes due 2009 and a B1 rating to its new $715 million senior secured credit facility.

Moody's said the upgrades are based on the improving financial profile of Corrections Corp., including its strengthened ability to maintain its leadership position in the correctional property development, ownership and management businesses, its continued improvement in operating results, and its stronger financial profile.

A key factor supporting the upgrades is Corrections Corp.'s successful completion of the refinancing of much of its debt, which would have matured on Dec. 31, 2002, Moody's said.

This refinancing transaction will alleviate Moody's concerns regarding the refinancing risk that has burdened Corrections Corp.

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.

S&P upgrades Corrections Corp.

Standard & Poor's upgraded Corrections Corp. of America and removed it from CreditWatch with positive implications. Ratings affected include Corrections Corp.'s corporate credit rating, raised to B+ from B. S&P also assigned a B+ rating to the company's new $715 million secured credit facility and a B- rating to its new $250 million 9.875% senior notes B-. The outlook is stable.

S&P said its actions followed the completion of Corrections Corp.'s refinancing, relieving the company of onerous near-term debt.

The ratings reflect the company's high debt leverage, somewhat mitigated by its leading position in the correctional facility management and construction businesses and improved liquidity stemming from the terming-out of its debt maturities, S&P said.

S&P added that it expects the company to maintain cash coverage in the 2x area and leverage at or below 5x over the intermediate term.

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