Moody's downgrades Azurix

Moody's Investors Service downgraded Azurix Corp.'s senior unsecured debt to Ca from B2, affecting $590 million of securities.

Moody's said the action "reflects concerns about the extent to which Azurix will remain fully insulated from the many financial and legal challenges facing its ultimate parent, Enron Corp. (Ca senior unsecured) following their Chapter 11 bankruptcy filing. The downgrade further considers the value of Azurix's asset base, consisting primarily of Wessex Water, and the likelihood that Azurix's debtholder's will fully recover their investment."

S&P rates new Collins & Aikman notes B

Standard & Poor's assigned a B ratings to Collins & Aikman Products Co.'s planned offering of senior unsecured notes due 2011 and a BB- rating to its senior secured bank credit facility. It also confirmed the company's existing ratings, including its B subordinated debt and BB- senior secured debt. The outlook is stable.

S&P said the ratings reflect Collins & Aikman's "leading market positions in the highly competitive and cyclical automotive supply industry, combined with a weak financial profile."

The acquisition of Textron Inc.'s Automotive Trim Division, to be financed with the notes and new credit facility, will result in "some improvement in Collins & Aikman's business profile by increasing product, customer, and geographic diversity, and providing greater scale in key product areas," S&P said.

Credit protection measures will also improve with pro forma total debt (including the addition of securitized accounts receivable) to EBITDA on a last 12-month basis declining to the 4.2 times area from about 5.0x as of Sept. 30, 2001, S&P added. But it warned financial risk will remain high, reflecting the company's high debt leverage and thin cash flow protection.

S&P cuts Paxson outlook to negative

Standard & Poor's cut its outlook on Paxson Communications Corp. to negative from stable and confirmed the company's ratings, including its senior secured credit facilities at BB, subordinated debt at B- and preferred stock at CCC+.

S&P said the revision is based on "concern about a weakening relationship between Paxson and the NBC Inc. unit of General Electric Co. that could increase Paxson's business and financial risk."

Paxson announced it has commenced a binding arbitration proceeding against NBC for allegedly breaching agreements between the two companies.

S&P added that its ratings "continue to reflect the high business and financial risk of Paxson's start-up television network amid the competitive, slow-growth industry environment. Financial risk stems from high acquisition-related debt and expensive debt-like preferred stock, weak EBITDA and negative discretionary cash flow. Tempering factors include Paxson's improving audience ratings, a lower cost programming strategy, rising profitability, and station asset values."

Moody's cuts British Airways to junk, on review for further downgrade

Moody's Investors Service downgraded British Airways plc's senior unsecured debt to junk, lowering it to Ba1 from Baa3, and its preferred securities to Ba3 from Ba2, affecting $940 million of debt. It also placed the ratings on review for possible further downgrade.

Moody's said the action reflects "the outlook for a sustained weaker cash flow generation as a result of the sharp reduction in demand for air travel, in particular from premium passengers and on the North Atlantic routes, pressure on ticket prices and yields, reduced financial flexibility and the expectation of higher leverage."

The impact of the Sept. 11 terrorist attacks and the global economic downturn will continue to "significantly reduce" British Airways' cash flow generation ability over the medium term, Moody's said.

The airline has been particularly hurt because of its focus on the profitable business class traveler and its exposure to the North Atlantic routes, Moody's said.

Moody's lowers Sequa

Moody's downgraded Sequa Corp., including cuttings its $75 million unsecured revolving credit facility due October 2002 to Ba3 from Ba2, its $200 million 8.875% senior unsecured notes due April 2008 to Ba3 from Ba2 and its $500 million 9.0% senior unsecured notes due August 2009 to Ba3 from Ba2. The outlook remains negative.

Moody's took the action because of "significant operating income decline experienced through the first nine months of 2001, including the latest quarter ending September 30, as weakness was experienced across several of Sequa's product segments despite modestly increasing sales. This continues Sequa's track record of modest operating margins and inadequate return on assets invested."

Moody's said it is also concerned future performance will be further depressed due to the deteriorating economic environment and decline in air travel, made worse by the Sept. 11 terrorist attacks and its adverse impact on Sequa's Chromalloy Gas Turbine commercial airline operations.

Based on expected fourth quarter results, Sequa will be out of covenant compliance on its $75 million revolving credit agreement, and accordingly, is in discussions regarding a waiver or amendment, Moody's said.

S&P raises Champion Enterprises outlook to stable

Standard & Poor's raised its outlook on Champion Enterprises Inc. to stable from negative. It also confirmed the company's ratings, including its B rated senior unsecured notes.

S&P said the outlook revision "acknowledges the company's modestly profitable manufacturing operations, improved liquidity, and manageable near-term capital needs."

Overall the ratings reflect difficult industry conditions that have resulted in overall weak corporate financial measures.

S&P commented: "The manufactured housing industry has been plagued by well-publicized repossessions and a constrained financing environment that continues to suppress new manufactured home shipments. The industry had appeared to be poised for a gradual recovery in 2002, after the prolonged contraction, as manufacturing capacity has contracted materially and retail inventory levels have recently improved. However, the current economic recession may slow that recovery, as this industry's buyers may be more vulnerable to expected layoffs."

The rating agency noted Champion has taken "dramatic steps to rationalize its operations" and has diversified its products and customers.

S&P puts Tower Automotive on negative watch

Standard & Poor's put Tower Automotive Inc. on CreditWatch with negative implications. Ratings affected include the senior unsecured debt at BB+, the convertible subordinated debt at BB- and the preferred stock and convertible trust preferreds at B+.

S&P said the action reflects "increasing concern that difficult industry fundamentals will prevent the company from achieving the improvement in financial measures factored into existing ratings and that financial flexibility could become more constrained than previously expected."

"Tower is currently experiencing earnings pressures due to the slowdown in the North American original equipment automotive market, increased pricing pressures, and significant launch costs for new vehicle platforms," the rating agency said.

These issues have led to "a significant deterioration" in credit protection measures in the past year, S&P added, noting that the company's existing ratings incorporate an expectation that financial measures would improve next year as a result of restructuring actions during the past year and a slowdown in new launch activity.

"However, given the current industry outlook, the likelihood of a significant improvement has become more uncertain," S&P said.

S&P raises Trump Atlantic City Associates from D

Standard & Poor's raised the corporate credit and senior secured debt ratings for Trump Atlantic City Associates and Trump Atlantic City Funding Inc. to CC from D and affirmed and removed from CreditWatch the CC corporate credit and senior secured debt ratings for Trump Hotels & Casino Resorts Holdings LP and Trump Hotels & Casino Resorts Funding Inc.

The outlooks for Trump Hotels & Casino Resorts Holding LP, Trump Hotels & Casino Resorts Funding Inc., Trump Atlantic City Associates, and Trump Atlantic City Funding Inc. are negative.

S&P said the revision is in response to the interest payments made recently on the 11.25% first mortgage notes due 2006 issued jointly by Trump Atlantic City Associates and certain subsidiaries.

S&P noted co-borrowers Trump Hotels & Casino Resorts Holdings LP and Trump Hotels & Casino Resorts Funding Inc. have an interest payment due on Dec. 15, 2001 on their 15.5% senior secured notes due 2005.

S&P said it has a negative outlook because the debt is vulnerable to further downgrades, "given bondholder negotiations and the company's statements regarding the next payment date."

S&P takes actions on Telesystem International

Standard & Poor's lowered its corporate credit rating on Telesystem International Wireless Inc. to CC from CCC+ and put the rating on CreditWatch with negative implications. It also put the CCC+ senior secured debt on on CreditWatch with developing implications.

The actions follow an exchange offer launched by the company.

S&P said it put the senior secured debt on CreditWatch developing because successful completion of the recapitalization plan could mean that asset coverage is sufficient to cover the entire loan facility.

However there is also the possibility that financial flexibility at the corporate level will be severely limited beyond the first quarter of 2002, should the transaction not be completed successfully and should the company be unable to obtain additional financing through the disposition of noncore assets, S&P said.

S&P said it cut the corporate credit rating because of the announced exchange of C$45 million for its C$150 million 7% equity subordinated debentures as part of the recapitalization. S&P described the exchange as coercive and equivalent to a default because bondholders will receive less than par.

S&P cuts Hayes Lemmerz International to D

Standard & Poor's lowered its ratings on Hayes Lemmerz International Inc. to D, affecting $1.8 billion of debt, including the senior secured debt, previously rated B-, the senior unsecured debt, previously rated CCC and the subordinated debt, also previously rated CCC.

The action follow Hayes' filing for reorganization under Chapter 11, S&P said.

S&P downgrades U.S. Can

Standard & Poor's downgraded U.S. Can Corp., including cutting its $275 million of 10.125% senior subordinated notes due 2006 to CCC+ from B. S&P also lowered ratings on its unit United States Can Co., including the bank facilities, cut to B from BB- and its $150 million of senior subordinated notes due 2010 to CCC+ from B.

S&P cuts Aftermarket Technology

Standard & Poor's downgraded Aftermarket Technology Corp., including lowering its $120 million of 12% senior subordinated notes due 2004 to B from B-.

S&P rates Rent-A-Center's new notes at B

Standard & Poor's assigned a B rating to Rent-A-Center Inc.'s planned offering of senior subordinated notes.

S&P downgrades Penton Media

Standard & Poor's downgraded Penton Media Inc. Ratings affected include the company's bank facilities, cut to B from BB- and its $185 million of 10.375% notes due 2011, cut to CCC+ from B. All ratings remain on CreditWatch with negative implications.

S&P downgrades Sbarro

Standard & Poor's downgraded Sbarro Inc., including lowering its $255 million of 11% senior unsecured notes due 2009 to B+ from BB-.

Moody's downgrades HCI Direct

Moody's Investors Service downgraded HCI Direct, Inc.'s $70 million of 13.75% senior subordinated notes due 2002 to C from B3. It also withdrew the ratings.

Moody's said the downgrade reflects HCI's failure to make an August interest payment on the bonds and the refinancing risks of the upcoming debt maturities, which Moody's believes will lead to a financial restructuring.

No public data is available but Moody's said it believes HCI has been unable to stem the severe decline in operating profits seen in the first quarter due to continued weakness in demand for hosiery and a "challenging cost structure."

Moody's also believes the company will need to restructure its debt; the rating reflects Moody's estimate of the severity of loss to the investors.

Moody's downgrades Fountain View

Moody's Investors Service downgraded Fountain View, Inc., including lowering $120 million senior secured credit facilities to Caa1 from B2 and its $120 million senior subordinated notes due 2008 to C from Caa1. The outlook is negative.

Moody's said the downgrade follows Fountain View's filing for Chapter 11 bankruptcy protection.

Moody's upgrades National Health Investors

Moody's Investors Service upgraded National Health Investors, Inc., raising $160 million of securities including its senior unsecured debt to B1 from B2, its senior subordinated debt to B3 from Caa1, and its cumulative preferred stock to B3 from Caa2.

Moody's said it lifted the ratings after National Health repaid its credit facilities ahead of schedule and reduced secured debt.

The company now has no debt payment obligations until February 2004 and liens on approximately $215 million of its mortgages receivable have been released.

Moody's added: "The ratings continue to reflect NHI's challenged 'work-out' situation, a difficult, albeit improving, healthcare environment, and the REIT's small size (approximately $700 million in assets). NHI remains in a challenged operating position; however, it is committed to paying its preferred dividend, and has resumed payment of its common stock dividend."

Moody's cuts Criimi Mae outlook to stable from positive

Moody's Investors Service lowered its outlook on CRIIMI MAE Inc.'s $53 million of preferred stock rated Ca to stable from positive.

The revision follows Criimi Mae's announcement that it deferred payment of dividends on its series B preferred stock for the fourth quarter of 2001 for an indefinite period.

Moody's said it views this action negatively as it may decrease the relative recovery rate for preferred stockholders.

Fitch downgrades Argentinean corporate bonds

Fitch downgraded and placed on Rating Watch Negative several corporate and related structured credit ratings in Argentina. Fitch has also affirmed ratings on two credits, which were also placed on Rating Watch Negative. The actions follow imposition of capital controls.

Foreign currency ratings affected include:

-- Aguas Argentinas SA cut to CC from CCC+, on negative watch;

--Capex SA cut to CC from CCC+, on negative watch;

--Compania Mega SA senior project debt cut to B+ from BB-;

Edenor SA cut to CC from CCC+, on negative watch, GAIN Trust Notes cut to B+from BB, on negative watch;

--Hidroelectrica Piedra del Aguila SA cut to CC from CCC+, on negative watch;

--Imagen Satelital SA cut to CC from CCC+, on negative watch;

--MetroGas SA cut to CC from CCC+, on negative watch;

--Molinos Rio de la Plata SA Secured Export Notes cut to B+ from BB, on negative watch

--Telecom Argentina SA cut to CC from CCC+, on negative watch;

--Telefonica Holding de Argentina SA cut to CC from CCC+, on negative watch;

--Transener SA cut to CC from CCC+, on negative watch;

--Transportadora de Gas del Norte SA cut to CC from CCC+, on negative watch, TGN CRIBs cut to B+ from BB, on negative watch, IFC B Loan Part. cut to B+ from BB, on negative watch;

--Transportadora de Gas del Sur SA cut to CC from CCC+, on negative watch, IDB B Loan Part. cut to B+ form BB, on negative watch;

--Pecom Energia SA cut to B- from B, on negative watch;

--Siderar SA cut to CC from CCC+, on negative watch;

--YPF SA affirmed at BBB-, put on negative watch, secured export notes cut to BBB- from BBB, on negative watch.

Fitch downgrades NATG

Fitch downgraded NATG Holdings, LLC's $150 million of 12.75% senior subordinated notes to CC from CCC+.

Fitch said the action is due to "an ongoing deterioration in revenues and EBITDA generation since the previous rating action was taken on July 2, 2001, poor visibility for new business, and the expectation for bank facility covenant violations."

It added that default seems likely unless there are unexpected and material improvement in results, external funding and continued bank lender forbearance after the current waiver period expires on January 15, 2002.

S&P rates new Forest Oil notes BB

Standard & Poor's assigned a BB rating to Forest Oil Corp.'s new senior notes due 2011.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.