Fitch confirms Fleming

Fitch confirmed its rating on Fleming Cos., Inc. including its secured bank credit facilities at BB+, its senior unsecured notes at BB and its senior subordinated notes at B+. The outlook remains negative.

Fitch said the action follows Fleming's announcement it will acquire two convenience store distributors for approximately $430 million in cash (including assumed debt), to be financed with a combination of debt and equity.

Fitch said it is maintaining its negative outlook because of uncertainty about Kmart's sales levels, the ultimate nature of Fleming's agreement with Kmart, as Fleming's contract with Kmart has not yet been confirmed in the bankruptcy process, and the inherent integration risks associated with the acquisitions. Also of concern is the possibility for additional Kmart store closures, beyond those already announced.

The two acquisitions will significantly enhance Fleming's distribution business and solidify its position as the largest food wholesaler in the U.S., Fitch said.

The rating confirmation reflects the significant equity component of the funding of these transactions, Fitch added.

While the pace of improvement in bondholder protection measures in 2002 will slow slightly from previously anticipated levels, leverage (total debt plus eight times rents to EBITDAR) and coverage (EBITDAR to interest and rents) at year-end 2002 are still expected to strengthen from the 4.4 times and 2.4 times respectively at year-end 2001.

Moody's rates ON Semiconductor notes B3, lowers existing

Moody's Investors Service assigned a B3 rating to the proposed $300 million guaranteed senior secured notes due 2008 to be issued jointly by ON Semiconductor Corp. and its wholly-owned subsidiary Semiconductor Components Industries, LLC and downgraded ON Semiconductor's and Semiconductor Components' outstanding debt. Moody's also revised the outlook to stable from negative. Ratings lowered include ON Semiconductor's $260 million 12% senior subordinated notes due 2009, cut to Caa1 from B3, and Semiconductor Components Industries' $200 million senior secured tranche A credit facility due 2005, $325 million guaranteed senior secured tranche B due 2006, $350 million guaranteed senior secured tranche C due 2007, $200 million guaranteed senior secured tranche D due 2007 and $150 million guaranteed senior secured revolving credit facility due 2005, all cut to B2 from B1.

Moody's said the downgrade reflects ON Semiconductor's sizable debt as measured against LTM EBITDA and book capitalization, continuing operating loss in the first quarter after operating losses throughout 2001, continued weakness in its wireless and broadband end markets and inconclusive evidence that a sustained recovery in the semiconductor components markets is under way.

LTM EBITDA would not have covered pro forma interest requirements, Moody's noted.

"The risk lies in the uncertain course of the economic recovery, and its impact on the duration of the continuing information technology and telecommunications spending downturn. A healthy 12% quarterly increase in backlog may augur a trend of improving unit demand, but could also be driven by a short lived period of inventory replenishment by OEMs and EMS providers alike," Moody's commented.

Positive include On Semiconductor's $148 million of cash at March 29, cost reductions which should translate into increased free cash flow available for fixed charges and, with the company's filing of a shelf registration to sell up to 40 million shares of common stock, the prospect of de-leveraging the balance sheet and easing interest requirements, Moody's said.

S&P rates Wise Alloys notes B+

Standard & Poor's assigned a B+ rating to Wise Alloys LLC's upcoming offering of $150 million senior secured notes due 2009 and a B+ rating to its $50 million revolving credit facility due 2007. The outlook is stable.

Moody's puts HMV on upgrade review

Moody's Investors Service put HMV Group plc and its subsidiaries on review for possible upgrade. Ratings affected include HMV's £440 million senior secured credit facility at B1, £135 million 10.875% senior subordinated notes due 2008 and $125 million 10.25% senior subordinated notes due 2008, both at B3, and $81.3 million 12.875% senior cumulative redeemable preference shares due 2009 at Caa2.

Moody's said its action follows HMV's filing of a prospectus for its initial public offering.

Moody's said its review will focus principally on the use of proceeds from the initial public offering and the resulting capital structure of the company as well as changes to the company's cash flow profile as a result of expected debt reductions.

For the 12 months to Oct. 27, 2001, HMV reported consolidated revenues of approximately £1.6 billion and EBITDA of approximately £128.5 billion, for total net borrowings of approximately £473.1 million, Moody's noted.

Moody's upgrades Remy Cointreau

Moody's Investors Service upgraded the senior debt rating of Remy Cointreau SA to Ba2 from Ba3 and assigned a positive outlook.

Moody's said the upgrade reflects Remy Cointreau's stable and predictable cash flows generated by the company's enlarged portfolio of premium brands following the successful integration of Bols which was acquired in December 2000.

The upgrade also takes into account benefits from the Maxxium distribution arrangements together with the anticipated focus on organic growth going forward, Moody's said. The rating agency also expects that the de-leveraging of the business over recent years will continue.

S&P upgrades Anteon

Standard & Poor's upgraded Anteon Corp. The outlook is stable.

Ratings affected include Anteon's $110 million six-year revolving credit facility and $60 million six-year term loan, both raised to BB from BB-, and its $120 million 12% senior subordinated notes due 2009, raised to B from B-.

S&P rates Associated Materials notes B, bank loan BB-

Standard & Poor's assigned a B rating to Associated Materials Inc.'s new $165 million of 9.75% senior subordinated notes due 2012 and a BB- rating to its $40 million revolving credit facility due 2007 and its $125 million term bank loan due 2009.

Moody's puts Dynegy, Illinova, Illinois Power on review

Moody's Investors Service put Dynegy Inc. and its subsidiaries on review for possible downgrade. Ratings affected are Dynegy Holdings' Baa3 senior unsecured debt rating and its Prime-3 commercial paper rating, Illinova Corp.'s Ba1 senior unsecured debt rating, Illinois Power Co.'s Baa2 senior secured rating, Baa3 senior unsecured debt rating and its Prime-3 commercial paper rating and Roseton-Danskammer pass through certificates at Baa3.

Moody's said the action follows Dynegy's announced reclassification of $300 million of operating cashflow to financing. The change will lower Dynegy's 2001 operating cashflow to $511 million (including changes in working capital), which essentially covers dividends of $100 million and capital required to maintain its existing asset base of $400 to $500 million, the rating agency said.

Given the company's financial obligations in excess of $7 billion, including on and off balance sheet debt, minority interest, and a portion of non-recourse project debt, coupled with the lack of transparency in the company's financial disclosure and aggressive business strategy, Moody's said Dynegy's stated sustainable recurring operating cashflow needs to "improve significantly" to support an investment-grade rating.

Fitch cuts Transener

Fitch Ratings downgraded the foreign and local currency ratings of Transener SA to DD from C.

Fitch said it cut Transener after the company's default on an interest payment due on its $250 million notes on April 1.

While the cure period has not yet expired, the company stated on April 22 its intention not to pay any principal or interest on any of its debt, Fitch noted.

Moody's downgrades Farmland

Moody's Investors Service downgraded Farmland Industries, Inc. The outlook is negative. Ratings affected include Farmland's $350 million senior secured five-year revolver and $150 million senior secured two-year term loan, both cut to B3 from B1, and its $100 million 8% preferred stock, cut to C from Caa3.

Moody's said it lowered Farmland because of the company's constrained financial flexibility due to weaker than expected fertilizer market conditions in the second fiscal quarter, lower than expected proceeds from non-core asset sales and greater than anticipated rolling maturities of demand notes and subordinated securities under its continuous debt program.

As a result, Farmland may not meet the financial covenants of its credit facilities as of May 31, 2002 and plans to seek waivers and amendments to retain access to adequate liquidity, Moody's added.

Farmland continues to work on sale of non-core assets to generate cash for debt reduction, the rating agency noted. Farmland has cited improved liquidity since mid-April due to the Coffeyville refinery being back at full production and the spring fertilizer season generating additional sales. Financial flexibility, however, could remain strained without waivers/amendments to its credit facility, given typical payment terms for fertilizer, the volatility of the fertilizer and refining businesses, and Farmland's complex organizational structure, Moody's said.

S&P takes Sun International off watch

Standard & Poor's removed Sun International Hotels Ltd. from CreditWatch with negative implications and confirmed its ratings. The outlook is stable.

Affected securities include Sun International's $200 million 9% senior notes due 2027, $100 million 8.625% senior notes due 2007 and $200 million 8.875% senior subordinated notes due 2011 all rated B+ and its $375 million reducing revolving credit facility bank loan rated BB.

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