S&P confirms Oxford Health, rates loan BB+

Standard & Poor's confirmed Oxford Health Plans Inc. including its counterparty credit at BB+ and assigned a BB+ rating to Oxford's planned $400 million six-year term loan. The outlook is stable.

S&P said the rating reflects Oxford Health's sustained earnings and liquidity strength as well as its good risk-adjusted capitalization, partially offset by the competitive marketplace in which Oxford operates and Oxford's geographic market concentration.

For 2003, S&P said it expects Oxford's enrollment to improve modestly. The company's consolidated pretax GAAP earnings are expected to remain extremely strong and in line with recent levels.

For 2003, parent-company liquidity is expected to continue to improve, and capital adequacy is expected to remain stable, S&P added. In addition, for the year-ended 2003, financial leverage and interest coverage are expected to remain extremely strong.

Oxford is very reliant on its presence in New York State, which exposes it to adverse developments on the legislative, regulatory, and economic fronts, S&P said. These could include provider contracting restrictions, pricing constraints, and deterioration of general business conditions.

S&P rates Cumulus Media's loan B+

Standard & Poor's rated Cumulus Media Inc.'s proposed $325 million senior secured term loan C due 2008 at B+. The outlook is stable.

Security is a perfected first priority interest in substantially all of the company's assets, including the capital stock of subsidiaries that hold the company's broadcasting licenses.

Proceeds from the term loan C will be used to refinance existing debt and fund the company's tender offer for its 10.375% senior subordinated notes due 2008. The proposed refinancing is expected to lower Cumulus's cost of capital, but does not reduce aggregate debt levels. Pro forma for the transaction, the company's debt structure will only consist of its $550 million senior secured credit facilities. Debt maturities, consisting of required term loan amortizations, are moderate in the near term.

Ratings reflect high financial risk from aggressive debt-financed station acquisitions, a competitive advertising environment and the potential for additional station purchases that could restrain meaningful financial profile improvement, S&P said.

Offsetting these factors is the company's decent market positions, good geographic diversity and expanding discretionary cash flow, S&P added.

In 2002, EBITDA coverage of interest expense was around 2.5 times and coverage of interest plus 13.75% debt-like preferred stock dividends was about 1.7 times. Pro forma total debt plus debt-like preferred stock to EBITDA was 5.2 times at Dec. 31, 2002, compared with around 8 times in 2001.

Moody's rates Tesoro notes, loan Ba3

Moody's Investors Service assigned a Ba3 rating to Tesoro Petroleum Corp.'s planned $650 million asset-based senior secured revolver, $150 million senior secured term loan and $400 million senior secured notes and confirmed its senior subordinated debt at B3.

Moody's said the ratings assigned to the prospective financings are notched up from the senior implied to reflect their senior secured position on core operating assets and their position ahead of a substantial layer of subordinated debt in Tesoro's capital structure.

Moody's ratings on the prospective term loan and notes assume they have a security interest in the company's six refineries and vital associated assets, which Moody's estimates would provide 1.3-1.5x collateral cover in reasonably low valuation scenarios. The refinery-related collateral, however, would have some risk. The security interest in certain assets critical to the operation of the refineries could be subject to perfection issues, and traditionally creditors have had concerns about taking collateral in assets like refineries. Also, there could be need to obtain third party and governmental consents, which could complicate a foreclosure and reduce the value of the refineries in a distressed sale.

The ratings outlook is stable if the prospective financings close, 2003 refining markets reasonably support expectations, trade credit and payables increase and Tesoro's performance meets expectations, Moody's said.

The greater flexibility and increased size of the revolver and the reduction in required term loan amortization to minimal levels over the next several years would improve to a degree Tesoro's ability to withstand periods of crude and refining market volatility, Moody's added. If the prospective financings do not close, Moody's will revisit Tesoro's flexibility under its existing facilities to meet a range of market conditions.

Moody's cuts Sinclair liquidity rating

Moody's Investors Service lowered Sinclair Broadcast Group's speculative grade liquidity rating to SGL-2 from SGL-1 and confirmed its other ratings including its senior secured credit facilities at Ba2, senior subordinated notes at B2, convertible preferred stock at B3 and Sinclair Capital's Hytops at B2. The outlook is stable.

Moody's said it cut the liquidity rating on expectations of minimal free cash flow in 2003 given the increase in capital expenditures ($90 million in 2003 versus a high $60 million in 2002) and the likely negative impact of the war in Iraq on the company's top line.

However, Moody's notes the SGL-2 rating reflects the company's good liquidity position and is based on expectations of flexibility under its bank covenants and sizable availability under the revolving credit (about $175 million of $225 million).

Moody's also expects Sinclair to have a strong first quarter since advertising was probably not adversely affected before some time in March.

Moody's rates Allied Waste loan, notes Ba3, convertibles B3, upgrades liquidity rating

Moody's Investors Service assigned a Ba3 rating to Allied Waste North America, Inc.'s proposed $3.0 billion senior secured credit facilities comprised of a $1.5 billion revolving credit facility due 2008 and a $1.5 billion of funded term loans due 2010 and to its proposed $300 million issue of secured senior notes due 2013 and a B3 rating to its proposed $300 million mandatory convertible preferred stock. Moody's also raised the Allied Waste Industries, Inc.'s speculative-grade liquidity rating to SGL-2 from SGL-3 confirmed the existing ratings including its credit facility and senior secured notes at Ba3, senior subordinated notes at B2 and convertible preferred stock at B3. Moody's maintained a negative outlook.

Moody's said it views the primary benefit of the company's refinancing plan as the extension of debt maturities as leverage remains high. However, some leverage decrease is expected as a result of this new refinancing plan and proceeds from potential asset divestitures.

New equity plus the proposed mandatory convertible preferred stock should improve the company's total debt to book capitalization ratio to 75% pro forma at Dec. 31, 2002 for the new capital structure from 78.4% actual in 2002.

Despite an expected revenue decline associated with planned divestitures, total debt to revenues should decrease to 1.5 times pro forma Dec. 31, 2002 from 1.6 times in 2002, Moody's added. Further, debt reduction, coupled with improved operating cash flows (due to improved margins and better working capital management) and lower capital expenditures improve total debt to free cash flow ratio to 17.1 times pro forma Dec. 31, 2002 from 18.1 times in 2002.

The negative outlook reflects the company's high, though slightly improving leverage relative to free cash flow (defined as cash from operations less capex), of 18.1 times in 2002, or approximately 17.1 times pro forma for the new capital structure for twelve months ending Dec. 31, 2002, Moody's said.

The negative outlook expresses Moody's continued concern with the size of the company's leverage vis a vis its potential to substantially reduce debt via free cash flow.

S&P rates Ethyl notes B, loan B+

Standard & Poor's assigned a B+ rating to Ethyl Corp.'s proposed $50 million senior secured revolving credit facility and $115 million term loan and a B rating to its proposed $150 million senior unsecured notes. The outlook is stable.

S&P said the ratings reflect Ethyl's improved financial profile following the proposed transactions offset by a below average business profile that reflects the highly competitive nature of the global petroleum additives industry and exposure to volatile raw material costs and the vagaries of economic cycles.

Over the past few years, Ethyl has been able to considerably reduce debt primarily through the termination of its overfunded pension plan and reductions in manufacturing assets, S&P noted. Capital expenditures for the next few years are not likely to be dramatically different from the $13 million spent during 2002 and interest expense should remain low, thus bolstering the company's discretionary cash generation. Consequently, total debt to EBITDA could experience some improvement from approximately 3.2x.

At Dec. 31, 2002, Ethyl reported a cash balance of $15 million, S&P said. The new financing transactions, if completed as proposed, will substantially eliminate near-term refinancing risk through the extension of debt maturities.

Moody's rates Ethyl notes B2, bank facility Ba3.

Moody's Investors Service assigned a B2 rating to Ethyl Corp.'s planned $150 million senior unsecured notes due 2010 and a Ba3 rating to its planned $50 million senior secured revolving credit facility due 2008 and $115 million senior secured term loan due 2009. The outlook is stable.

Moody's said the ratings reflect the maturity of Ethyl's end-markets; declining demand for tetraethyl lead; continued operating margin pressure in engine oil additives; and significant competitive pressures in the petroleum additives segment.

The ratings are supported by Ethyl's moderate pro forma financial leverage; its various leading shares in fuel and lubricant additive products; substantial reductions in debt over fiscal 2002; and its good cash flow.

For the credit facilities, Moody's said that using a conservative liquidation analysis, which assumes limited recovery of international assets, it believes that there is acceptable collateral support for the debt.

The stable outlook reflects Moody's expectation that Ethyl will generate positive free cash flow and will remain committed to debt reduction for the near-term.

Adjusted for the new financing and the sale of the antioxidant business to Albemarle (completed in January 2003), pro forma debt stood at $271 million as of Dec. 31, 2002. Based on reported EBITDA of $86 million in fiscal 2002, debt to EBITDA was 3.2 times. EBITA coverage of pro forma interest expense was 3.0 times over the same period. Pro forma debt to capitalization stood at 62%, Moody's said.

S&P cuts some Goodyear senior unsecured debt

Standard & Poor's downgraded most of Goodyear Tire & Rubber Co.'s senior unsecured debt issues to B+ from BB- and removed them from CreditWatch with negative implications. Other ratings were confirmed with a negative outlook.

S&P said the downgrade reflects Goodyear's announcement that it closed on $3.3 billion in secured credit facilities, resulting in a significant increase in the proportion of secured debt in the company's balance sheet.

The new secured facilities effectively rank senior to the unsecured notes. The unsecured notes are now rated one notch below the corporate credit rating, based on the proportion of secured debt.

One unsecured issue, the approximately $100 million of Swiss franc-denominated bonds, became secured upon closing of the secured credit facilities, sharing liens on certain U.S. manufacturing facilities, S&P noted. As a result, the rating on this one issue is being confirmed at BB-.

S&P said the negative outlook reflects its concerns that material improvement in financial performance could be delayed and that financial flexibility will erode if the execution of management's turnaround plan fails to make substantial progress over the next year. The ratings could be lowered if the company is unable to demonstrate progress toward achieving and maintaining satisfactory credit protection measures or if liquidity erodes significantly.

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