Moody's puts AES on review for downgrade

Moody's Investors Service put AES Corp. on review for possible downgrade. Ratings affected include AES' senior unsecured debt at Ba1 and its senior and junior subordinated debt at Ba2.

Moody's said its action reflects "concerns about the adequacy of cash flow relative to the large debt load of the company as well as the stability and predictability of that cash flow."

The rating agency said its review will focus on AES' ability to repatriate cash from its international investments and its sensitivity to exchange rate fluctuations, its "effective leverage" irrespective of the legal non-recourse nature of much of its debt, its ability to significantly reduce capital expenditures without impairing cash flow, the impact of changes in business mix on its risk profile and the timing and use of proceeds of announced asset sales, and the impact of limited access to the capital markets in the near term and the company's longer term ability to continue to access the commercial bank project finance market.

Moody's added that while AES remains dependent on bank financing, its near term liquidity appears adequate.

S&P keeps AES on watch, negative

Standard & Poor's said AES Corp.'s plans to shore up its liquidity position in the short term and to boost credit quality by divesting riskier assets and growing its cash flow cushion in the longer term as positive for the company's credit. AES remains on watch with negative implications due to pressure on the bolivar and the resulting potential impact on parent-level cash flows, S&P said. The successful implementation of AES' plans to boost liquidity would diminish the potential for a downgrade resulting from the Venezuelan situation.

S&P lowers ITC DeltaCom, on watch

Standard & Poor's downgraded ITC DeltaCom Inc. and put the company on CreditWatch with negative implications. Ratings affected include ITC DeltaCom's $200 million 11% senior notes due 2007, $160 million 8.875% senior notes due 2008, $100 million 4.5% convertible subordinated notes due 2006 and $125 million 9.75% senior notes due 2008, all cut to CC from CCC-, and Interstate FiberNet Inc.'s $160 million revolving credit facility B guaranteed by ITC DeltaCom, lowered to CCC- from CCC+.

S&P said its action is in response to increased concerns over liquidity.

ITC DeltaCom may be unable to draw down the remaining $70 million on its existing preferred stock agreement with ITC Holding Company Inc., SCANA Corp. and HBK Master Fund LP because it may trigger a change of control under its senior note and senior credit facility indentures, S&P said.

The $70 million availability is the company's only source of liquidity, S&P added.

"Although the company is pursuing alternatives for long-term financing, Standard & Poor's is concerned that the company may face a funding gap in the very near term," the rating agency said.

Moody's rates RFS new notes B1

Moody's Investors Service assigned a B1 rating to the planned offering of $125 million senior unsecured notes by RFS Partnership, LP and RFS 2002 Financing, Inc., subsidiaries of RFS Hotel Investors, Inc. The outlook is stable.

Moody's said the stable outlook reflects RFS' solid credit statistics and the resilience of its earnings performance amidst depressed market conditions.

The rating is based on RFS' comparatively good balance sheet fundamentals, its consistent operating track record and its national brand and hotel portfolio diversity, Moody's said.

"During a difficult period in the lodging business, the REIT has maintained a good financial position while experiencing less deterioration in operating performance than many of its peers," the rating agency continued, adding that RFS has pursued a prudent growth strategy while financing its expansion efforts with equity and modest levels of leverage.

However RFS also has high levels of secured debt, is small in size, has significant geographic concentration in California and suffers from the inherent volatility of the lodging sector.

Fitch confirms Allegiance Telecom

Fitch Ratings confirmed Allegiance Telecom's B+ senior secured rating assigned to its $500 million secured credit facilities and its B senior unsecured ratings assigned to its 11½% senior discount notes due 2008 and 12 7/8% senior notes due 2008. The outlook is stable.

Fitch said Allegiance continues to generate strong sequential revenue growth while managing its expenses in light of a weaker economy and negative industry sentiment.

"This performance can be attributed to its strong management team and relatively conservative financing strategy, pre-funding its business plan," the rating agency added.

Fitch said it expects the current performance to continue, driven by the revenue and cost benefits of Allegiance's Integrated Access Service offering.

S&P puts Guangzhou-Shenzhen Superhighway on positive watch

Standard & Poor's put Guangzhou-Shenzhen Superhighway (Holdings) Ltd.'s $200 million 9 7/8% notes due 2004 and $400 million 10¼% notes due 2007 on positive watch, removing them from CreditWatch with negative implications. The notes are rated BB-.

S&P said it put the notes on positive watch because it expects the ratings will be "significantly raised" as a result of the effecting of a covenant defeasance. In this case, the defeasance means $562 million has been put in a trust account to cover principal and interest on both notes.

Moody's rates Polypore's new loan Ba3

Moody's Investors Service assigned a Ba3 rating to Polypore, Inc.'s new $160 million senior secured term loan C due 2007 taken out to help finance its acquisition of a German membrane manufacturer and its redemption of preferred stock and accumulated preferred dividends. Moody's also confirmed Polypore's existing ratings including its existing credit facilities at Ba3. The outlook remains stable.

Moody's said the rating action reflects its expectation that Polypore's leverage will be reduced from its post-acquisition peak, and that the company will successfully integrate the pending German acquisition.

The acquisition together with the planned preferred stock redemption will increase Polypore's leverage back up to the approximately 3.5 times debt/EBITDA level prior to its very successful integration of its 1999 acquisitions of the Celgard lithium electrolytic membrane business and Exide's Corydon electrolytic membrane plant, Moody's said.

Fitch upgrades TeleCorp, Tritel

Fitch Ratings upgraded TeleCorp Wireless and Tritel PCS following closing of their acquisition by AT&T Wireless.

TeleCorp Wireless' senior secured credit facility was raised to BBB from B+ and its senior subordinated notes to BBB- from B-.

Tritel's senior credit facility was upgraded to BBB from B+ and its senior subordinated notes to BBB- from B-.

The ratings were removed from Rating Watch Positive and assigned a stable outlook.

Moody's rates new Cumulus bank facility B1

Moody's Investors Service assigned a B1 rating to Cumulus Media Inc.'s proposed $100 million senior secured reducing revolving credit facility due 2009, $100 million term loan A due 2009 and $150 million term loan B due 2010. On closing of this new bank line, ratings on Cumulus' existing $175 million credit facilities will be withdrawn. Moody's confirmed ratings on Cumulus' other debt including its $160 million guaranteed senior subordinated notes due 2008 rated B3 and $134 million exchangeable redeemable preferred stock due 2009 rated Caa1. The outlook remains negative.

Moody's said Cumulus' ratings continue to reflect the risks of its high financial leverage and low cash flow coverage of interest and dividends; low cash flow margins relative to its peers; integration risk associated with the company's most recently announced and already completed acquisitions; the highly competitive nature of the radio broadcasting industry; and the continuing soft advertising environment.

But the ratings are helped by the margin improvement Cumulus has experienced during recent periods; the large size and good geographic diversity of its operations; management's history of and willingness to monetize assets to initiate balance sheet repair; and the expectation that new equity capital will be strongly considered as a primary de-leveraging vehicle over the forward rating horizon, Moody's said.

S&P lowers Filtronic notes

Standard & Poor's downgraded Filtronic plc's $140.75 million 10% notes due 2005 to B- from B and confirmed the company's corporate credit rating at B. S&P removed both ratings from CreditWatch with negative implications. The outlook is negative.

S&P puts Hines on positive watch

Standard & Poor's put Hines Horticulture Inc. on CreditWatch with positive implications. Ratings affected include Hines' $120 million 12.75% notes due 2005 rated B- and its $200 million revolving credit facility due 2003, $50 million term loan due 2003 and $100 million secured bank loan due 2005, all rated B+.

S&P said its action is in reponse to Hines' plans to sell its Canadian subsidiary, Sun Gro Horticulture Canada Ltd., and the business and assets of Sun Gro Horticulture Inc., to the Sun Gro Horticulture Income Fund, a newly established Canadian income fund.

S&P rates new Cumulus loan B

Standard & Poor's assigned a B rating to Cumulus Media, Inc.'s new credit facility, made up of a $100 million revolving credit facility due 2007, a $100 million senior secured term loan A due 2007 and a $150 million senior secured term loan B due 2007.

S&P downgrades Weigh-Tronix, still on watch

Standard & Poor's downgraded Weigh-Tronix LLC and kept it on CreditWatch with negative implications. Ratings affected include SWT Finance BV's €100 million 12.5% subordinated notes due 2010, rated C and its $30 million term loan A due 2005, $40 million term loan B due 2007 and $50 million revolving credit facility due 2005, all cut to CCC- from CCC+.

S&P said its action is based on "the significant risk" Weigh-Tronix may be unable to amend its banking covenants following a poor financial performance in the quarter ended Dec. 31, 2001.

"The failure to successfully renegotiate its banking covenants could lead to acceleration of the company's debt, as Weigh-Tronix forecasts that cash flow will not be sufficient to comply with current financial covenants," S&P said.

S&P takes Captain D off watch

Standard & Poor's confirmed and removed from CreditWatch with negative implications the CCC+ corporate credit rating on Captain D's Seafood Restaurants after Shoney's Inc., the parent of Captain D's, announced it will merge with an affiliate of Lone Star Funds and that Lone Star has acquired the $135 million bank loan of Captain D's from the existing bank group. The outlook is negative.

The bank loan was scheduled to mature on March 31, 2002 but had been extended to Oct. 31, 2002, S&P noted.

The rating reflects the potential that the deal may not close thereby leaving the risk of default if Captain D's is unable to refinance its $135 million bank loan, S&P added.

Moody's puts Jupiters on downgrade review

Moody's Investors Service put Jupiters Ltd. on review for possible downgrade including its senior unsecured notes due 2006 at Ba2.

Moody's said the review follows Jupiters' announcement that it will repurchase 40 million founder shares, representing 16.6% of the total issued capital. The buyback will be funded by a reset preference share issuance of up to A$200 million lion.

Moody's said it will examine the impact of the proposed transaction on the company's capital structure and financial flexibility. It will also look at Jupiters' capital management strategy going forward and ability to maintain debt protection measurements.

S&P confirms Jupiters

Standard & Poor's confirmed its BB+ corporate credit rating on Jupiters Ltd. after the company announced it will issue A$188.6 million in cumulative resetting preference shares to fund a selective buyback of 40 million shares from its two founding shareholders.

The share buyback will significantly increase Jupiters' financial leverage, S&P said. However, the company's strong position in Queensland's gaming market, its solid operating cash flows and its target debt to EBITDA ratio of less than two times should ensure credit protection measures remain adequate for the rating in the next few years, S&P added.

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