Moody's rates Insight Communications' SGL-2

Moody's Investors Service assigned a speculative grade liquidity rating of SGL-2 to Insight Communications Co., Inc.

The rating broadly reflects the company's "good" liquidity position as projected for the next year. While the company is likely to continue generating slightly negative, or perhaps breakeven, cash flow from operations over the forward period, current excess cash balances coupled with full covenanted availability as anticipated under its remaining undrawn subsidiary revolver \should be more than adequate to fund the company's cash needs, Moody's said.

The company had covenanted access to the approximately $255 million in undrawn capacity under its revolver at the end of the first quarter and also maintained about $91 million in cash balances. There are no public debt maturities scheduled for the next 24 months, but the Insight Ohio $25 million revolver will completely amortize by the third quarter of 2004 and will subsequently necessitate refinancing with additional borrowings under the Insight Midwest Holdings revolver. Furthermore, the Insight Midwest Holdings term loans will also begin to amortize in 2004, resulting in an additional $80 million in amortization payments next year.

Moody's rates Allegheny's loans

Moody's Investors Service rates Allegheny Energy Inc.'s unsecured bank credit facility at B2, Allegheny Energy Supply Co.'s "new money" bank credit facility, which has a first priority lien on its assets, at B1 and Allegheny Energy Supply's restructured bank credit facilities, which have a second priority lien, at B2.

Moody's also downgraded Allegheny Energy's senior unsecured rating to B2 from B1 and Allegheny Energy Supply's senior unsecured rating to B3 from B1. The ratings of Allegheny Energy and its subsidiaries remain under review for possible further downgrade.

The rating actions reflect liquidity concerns and limited financial flexibility in the near and intermediate term, particularly relating to meeting debt repayment schedules on the bank credit facilities in 2003 and 2004, weak operating cash flow relative to consolidated debt levels, pressures on cash flow and earnings at Allegheny's core utility operations due to an increase in purchased power costs pursuant to the renegotiated power sales agreement with Allegheny Energy Supply and execution risk associated with Allegheny's plan to meet the debt repayment schedule and strengthen the company's balance sheet through asset sales and/or public or private funding, Moody's said.

The ratings remain under review due to uncertainties regarding the continued delay in reporting audited year-end and first quarter financial statements, as well as the recent announcement of the need to obtain further Securities Exchange Commission approval to engage in financing because the company's consolidated common equity ratio has fallen below the required 28% threshold previously established with the SEC, Moody's added.

Fitch affirms Saks' loan BB+, notes BB-

Fitch Ratings affirmed Saks Inc.'s $700 million secured bank facility at BB+ and $1.2 billion of senior notes at BB-. The rating outlook remains negative.

Ratings reflect the company's solid position within its markets balanced against its weak operating results and high financial leverage. Operations have been pressured by soft apparel sales and growing competition from specialty and discount retailers. Sales at the luxury retail business have also been hurt by declines in international tourism. Saks is projecting flat to negative comparable store sales in 2003, which will further pressure earnings and cash flow.

The company strengthened its liquidity position by selling credit business for about $330 million. These proceeds, which brought cash balances to $503 million as of May 2003, will be used to repurchase common stock and reduce debt, as well as reinvest in the business.

EBITDAR coverage of interest plus rents of 2.0 times in the twelve months ended May 3, 2003 compares with 1.7 times in 2001 and 2.5 times in 1999. Leverage as measured by lease-adjusted debt to EBITDAR of 4.4 times in twelve months ended May 4, 2002 compares with 5.3 times in 2001 and 4.0 times in 1999.

S&P ups Alaris Medical's notes to B, loan to BB

Standard & Poor's upgraded Alaris Medical Systems Inc.'s $175 million 7.25% senior subordinated notes due July 1, 2011 to N from B-, $245 million term loan B die June 2009 to BB from BB- and $30 million revolver due June 2008 to BB from BB-. The ratings outlook is stable.

The upgrade is in response to the company's completion of the new credit facility and notes offering, which combined with $114 million of new common equity, were used to repay about $508 million of existing debt.

"The ratings upgrade reflects ALARIS' revitalized portfolio of well-received, advanced medication safety products, which has strengthened company cash flows and enabled it to repay debt," said Standard & Poor's credit analyst Jill Unferth. "The upgrade also reflects the additional financial improvement achieved by the recapitalization."

Ratings continue to reflect a relatively narrow operating focus, an exposure to competitive innovations in its core technologies and still-aggressive debt leverage. These factors are partially offset by the company's leading positions in certain strong niche medical businesses, its relatively stable earnings from recurring-sale consumable products and contracts with large, domestic group-purchasing organizations.

S&P puts Yell on positive CreditWatch

Standard & Poor's placed Yell Group PLC's BB- long-term corporate credit rating on CreditWatch with positive implications following the company's announcement that it intends to float on the London stock exchange.

"The CreditWatch placement reflects management's intention to reduce Yell's cash paying net debt to £1.30 billion ($2.20 billion) in financial 2003/2004 from £1.55 billion at the end of March 2003, to repay £100 million of vendor loan notes held by British Telecommunications PLC, and to exchange £700 million of shareholder bonds into equity," said Standard & Poor's credit analyst Anna Overton. "The extent of any potential upgrade following the IPO would depend on the new capital structure of the group and finalization of dividend policy once the transaction is completed. Any upgrade is likely to be limited to one notch."

Of the £227 million intended for reducing cash paying debt, about £54 million is to be used to reduce senior credit facilities and £173 million could be used to repay about 35% of senior notes issued by subsidiary Yell Finance B.V.

Ratings reflect the company's leading position in U.K. printed classified telephone directories supported by substantial growth prospects in the U.S. These factors are offset by the group's highly leveraged capital structure.

Moody's puts Yell's loan, notes on review for upgrade

Moody's Investors Service placed the B2 debt rating of Yell Finance BV's senior notes, including the GBP 250 million of 10.75% senior notes due 2011, the $200 million of senior notes due 2011 and the $288 million of 13.5% senior discount notes due 2011, and the Ba3 rating of the company's senior bank facilities at the operating and intermediate holding company level under review for possible upgrade.

The review is based on the potential for material debt reductions and improvements in the company's capital structure in connection with its planned initial public offering and flotation on the London Stock Exchange.

Yell expects to raise approximately GBP 403 million in net primary proceeds, which the company intends to use primarily to prepay approximately GBP 54 million principal amount outstanding under its senior bank facilities, redeem up to 35% of its senior notes and senior discount notes and prepay approximately GBP 100 million principal and related interest of approximately GBP 8 million under deeply subordinated vendor loan. The company also plans on converting approximately GBP 708 million of deeply subordinated shareholder loans into common equity.

S&P changes DaVita's outlook to positive

Standard & Poor's revised the rating outlook on DaVita Inc. to positive from stable and affirmed the speculative-grade BB- corporate credit rating. The outlook change indicates that DeVita's ratings could be raised if the company continues to strengthen its financial profile.

Since its aggressive recapitalization in April 2002, DaVita has generated increasingly strong levels of operating cash flow , which has enabled the company to build cash and deleverage on a debt to EBITDA basis. In addition, the pending amendment of the company's $841.5 million bank term loan should reduce borrowing costs and create more operating latitude under covenants.

As of June 27, 2003, DaVita had about $1.46 billion of debt outstanding, including a $125 million convertible subordinated notes issue that will likely be redeemed in July 2003.

"DaVita's speculative-grade ratings reflect the company's dependence on treatment for a single disease state, its vulnerability to cuts or insufficient increases in third-party reimbursement rates, cost-management challenges, and very aggressive financial policies," said Standard & Poor's credit analyst Jill Unferth. "These factors are partly offset by the stabilizing effects of a recurring revenue stream, a large clinic network with the No. 2 U.S. market position, and attractive growth prospects."

S&P changes Head N.V.'s outlook to negative

Standard & Poor's revised its outlook on Head N.V. to negative from stable, as ongoing weak industry conditions impair profitability and credit protection measures. At the same time, the BB- long-term corporate credit and B senior unsecured debt ratings were affirmed.

"The outlook revision follows 18 months of weak industry conditions in the sports equipment market, highlighting the discretionary nature of sports equipment spend and a poor outlook for the rest of 2003," said Standard & Poor's credit analyst Olli Rouhiainen.

Ratings reflect the competitive nature of this cyclical and seasonal industry and the company's aggressive financial profile. These factors are offset by its leading market positions in tennis, alpine skiing, and diving equipment, as well as its solid geographical diversification.

"Head is expected to show some improvement in its credit ratios by financial year-end 2003, through cost control and market share gains, and allocate free cash flow generation to debt repayment," said Rouhiainen. "Share buybacks are not factored into the ratings and would trigger a ratings review."

Moody's rates Mohegan Tribal Gaming's notes Ba3, loan Ba1

Moody's Investors Service rated Mohegan Tribal Gaming Authority's (MTGA) proposed $330 million senior subordinated notes due 2009 at Ba3 and the existing $391 million secured bank facility due 2008 at Ba1. The ratings outlook is stable.

Proceeds from the notes will be used to repurchase or defease all of the $300 million 8 ¾% senior subordinated notes due 2009. The Ba3 rating on these notes will be withdrawn once the transaction closes.

The existing credit facility consists of a $291 million revolver and a $100 million term loan, and is secured by a lien on substantially all of MTGA's assets. MTGA has the option to increase the size of the bank facility to $500 million.

Ratings reflect favorable demographics, continued growth of the Connecticut gaming market as well as limited competition in that market, improved free cash flow profile and management's stated intention to apply free cash flow towards debt reduction over the next two fiscal years, Moody's said. Management intends to improve debt/EBITDA to below 4.0 times by fiscal year-end 2004. For the 12-month period ended March 31, debt/EBITDA was about 4.7 times.

Credit concerns include the dependence on a single property and the sizable dividend being paid to the Mohegan Tribe of Indians of Connecticut, Moody's added.

Moody's ups Jo-Ann Stores notes to B2

Moody''s Investors Service upgraded Jo-Ann Stores Inc.'s $76.9 million 10.375% senior subordinated notes due 2007 to B2 from B3. The rating outlook is stable.

The upgrade reflects improvements to leverage and coverage measures following the redemption of $46 million subordinated notes through cash generated from operations and the belief that recent top-line and margin improvements the company achieved as a result of its turnaround strategy should be sustainable, Moody's said.

Ratings reflect the company's ability to reduce debt and finance operations and growth through internally generated cash flow, increased debt protection measures, significant improvements to operations, the closure of less productive stores, favorable industry and demographic trends, conservative financial management, strong national brand in the crafting segment and the company's leading position in the fabrics side of the industry, Moody's said.

Ratings also reflect the risks inherent with the company's return to growth of its superstore concept, the highly competitive and fragmented nature of the crafting market, increasing fashion risk as Jo-Ann continues to increase the amount of crafting products as a percentage of its total mix, higher levels of seasonality as the company increases the amount of superstores and the potential for liquidity to tighten as the company uses cash balances to redeem its subordinated notes at the same time that it pursues a growth strategy which could potentially require draws on its working capital line to fund growth or operations, Moody's added.

Adjusted debt to EBITDAR is expected to remain around 4.0 times, EBITDA to interest is expected to rise above 6.0 times and EBITDAR to Interest plus rents is expected to remain at or above 1.7 times for the near to medium term.

Moody's rates TransDigm's loan B1, notes B3

Moody's Investors Service rated TransDigm Inc.'s proposed $440 million senior secured credit facility, consisting of an $80 million revolver due 2009 and a $360 million term loan due 2010, at B1 and proposed $300 million senior subordinated notes due 2011 at B3. The ratings outlook is negative. This concludes the ratings review initiated June 9.

Proceeds from the bank loan (only $35 million is expected to be drawn on the revolver) and the bond deal combined with a $532 million equity investment from Warburg Pincus will be used to purchase shares of the company from Odyssey Investment Partners.

The ratings and their outlook reflect a high amount of leverage in the company, which will increase substantially with the leveraged purchase by affiliates of Warburg Pincus and management, the difficult commercial aviation environment in which the company operates, weak asset protection, and a relatively small revenue base, Moody's said.

Ratings also reflect the company's proven ability to achieve strong operating cash flows and margins even through historically weak market conditions, its track record of debt repayment, strong interest coverage and positive business dynamics from its military segment, Moody's added.

Post-transaction, debt is estimated to increase 73%, from $401 million (as of March 2003) to $695 million, which represents leverage increase from approximately 3.4 times pro forma LTM EBITDA to about 5.5 times. Free cash flow for 2003 is expected to be less than 10% of total debt.

S&P rates Vivendi's notes B+

Standard & Poor's rated Vivendi Universal S.A.'s proposed €1.11 billion high-yield notes issue due 2008 at B+. The outlook is stable.

The proposed five-year notes will rank pari-passu with the company's other senior unsecured debt, primarily its existing public bonds, but will be subordinated to Vivendi's credit lines, which are secured by the company's assets.

"The notes will be used to refinance a €1.1 billion credit facility, which will enable Vivendi to simplify its 70% ownership interest in French telecoms operator Cegetel Groupe S.A. and gain better access to dividends from Cegetel," said Standard & Poor's credit analyst Trevor Pritchard. "Vivendi will also benefit from lower interest costs and further improvements in its debt maturity profile."

S&P affirms Cablevision

Standard & Poor's affirmed the ratings of Cablevision Systems Inc. (senior BB, subordinated B+, preferred B) following its agreement to acquire MGM's 20% share of American Movie Classics Co., The Independent Film Channel LLC and Women's Entertainment LLC for $500 million.

The outlook is negative.

The acquisition will be paid for in a combination of cash and five-month seller notes. The $250 million five-month seller notes is likely to be refinanced with additional debt.

In addition to the MGM transaction, Cablevision has incremental cash requirements of about $564 million associated with the planned spin-off of its direct broadcast satellite project in late 2003.

The transactions incrementally weaken Cablevision's overall credit profile by largely exhausting its debt capacity at the current rating level. In fact, these transactions result in a deferral in financial improvement previously factored into the rating for 2003.

At April 29, availability under the combination of its $2.4 billion bank facility at CSC Holdings and $375 million in bank facilities at Rainbow Media Holdings Inc. and AMC/IFC/WE, were about $719 million, before requirements associated with the MGM and DBS transactions.

However, availability under the facilities is subject to financial covenant requirements. The CSC Holdings bank facility is subject to a 6.75x debt to EBITDA through March 31, 2004, which could limit availability. Moreover, the covenant tightens to 6.25x as of April 1, 2004.

Given some anticipated increase in debt at the CSC Holdings level to finance the MGM and the satellite transactions, the company has less cushion to meet this tighter covenant in 2004 if it does not increase cable operating cash flows from current levels.

Moody's rates Dana SGL-3

Moody's Investors Service assigned an SGL-3 speculative grade liquidity rating for Dana Corp. and affirmed all other existing ratings, including the Ba3 on the company's $400 million unsecured revolver and the Ba3 on the approximately $2.35 billion of senior unsecured notes. Furthermore, the rating outlook was revised to positive from stable in recognition of reduced absolute debt levels achieved through improved operating performance and asset divestitures, together with expectations for more meaningful improvement in Dana's credit protection measures over the next 18-to-24 months.

The liquidity rating reflects the opinion that Dana's liquidity is adequate over the next twelve months, relative to the company's roughly $9.8 billion revenue base and approximately $2.5 billion existing debt load.

The rating affirmation reflects that the companies' credit protection measures remain consistent with the current ratings and have not manifested material improvement to date.

On a consolidated GAAP reporting basis for the last twelve months ended March 31, 2003, Dana reported total debt/ EBITDA leverage approximating 3.9x and 4.4x, respectively, before and after including adjustments for pensions and the present value of operating leases. Consolidated net debt/EBITDA was 3.2x, including only on-balance sheet debt obligations. LTM EBIT coverage of interest was reasonably good at about 1.85x, while the EBIT return on assets was weak at about 4.8%. EBIT and EBITDA in these calculations were adjusted to add back roughly $191 million of restructuring and other non-recurring charges taken during the LTM period.

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