Moody's downgrades CSC Holdings

Moody's Investors Service downgraded Cablevision Systems Corp.'s unit CSC Holdings, Inc., affecting $5.9 billion of debt. The outlook is stable. Ratings affected include CSC's senior unsecured notes and debentures, cut to Ba2 from Ba1, its senior subordinated notes and debentures, cut to Ba3 from Ba2 and its preferred stock, cut to B1 from Ba3.

Moody's said it downgraded CSC because of its "very high and growing amount of debt leverage on its balance sheet, and correspondingly reduced financial flexibility and diminished credit profile in the absence of any perceived potential for equity-raising activities that might otherwise mitigate some of this added risk."

Even for the lowered ratings level, debt service coverage and forward liquidity position "remain somewhat weak," Moody's said.

High capital spending requirements are not new but CSC has suffered from slower than anticipated cash flow growth, cancellation of the previously planned $1 billion convertible preferred stock offering and real growth in the acceptable risk tolerance appetite of management, Moody's said.

Moody's puts UAL on downgrade review

Moody's Investors Service put the ratings of UAL Corp. and its subsidiaries on review for possible downgrade. A total of $15 billion of debt is affected including United Air Lines Inc.'s senior unsecured rating and industrial revenue bonds at Caa1 and its equipment trust certificates at B1, UAL Corp.'s convertible preferred stock and cumulative preferred stock at Ca, and UAL Corp. Capital Trust I's preferred stock at Caa3.

Moody's said the review follows the vote by the members of the IAM (International Association of Machinists and Aerospace Workers) to reject a proposed new labor contract and authorizing a strike as early as Feb. 20 if an agreement with the airline cannot be reached.

"Although both management and labor have indicated their intention to continue negotiations, the rejection of the contract increases the potential for a labor action that could have severe negative implications for United's operations and as a result, its financial risk profile," Moody's said.

In the event of a strike or labor action, Moody's said the downgrade could potentially be by more than one notch.

S&P says United strike would cause downgrade

Standard & Poor's said it would likely downgrade the ratings of UAL Corp. and its United Air Lines Inc. unit if the mechanics union goes on strike. And the rating agency warned a prolonged work stoppage could force the companies into bankruptcy.

Fitch puts Flag on negative watch

Fitch Ratings put Flag on Rating Watch Negative. Ratings affected include Flag Telecom Holdings Ltd.'s B+ rating and Flag Ltd.'s BB+ rating.

Fitch said it put the company on watch in response to comments in Flag's preliminary fourth quarter and full year financial results statement, specifically, that the company is reviewing its business in light of deteriorating market conditions.

"Concerns have been raised about their liquidity position beginning 2003 given the current operating environment, and particularly that of the capital markets generally for operators in their sector," Fitch noted.

For Flag Europe-Asia operated by Flag Ltd., Fitch added that the company has said it is reviewing this network, including the likelihood that it will generate sufficient cash to repay the $430 million of senior notes currently outstanding at maturity in 2008.

S&P rates new Mohegan notes BB-

Standard & Poor's assigned a BB- rating to Mohegan Tribal Gaming Authority's new issue of $250 million 8% senior subordinated notes due 2012 and confirmed the issuer's existing ratings. The outlook remains negative.

S&P said the ratings reflect the high quality of the Mohegan Sun casino and related amenities, limited regional competition and the favorable demographics of the southeastern Connecticut market.

Offsetting these positives are a lack of geographic diversity, high debt leverage for the rating and lower-than-expected cash flow in the immediate months after the first phase of the Project Sunburst expansion opened on Sept. 25, 2001, S&P added.

Longer-term, S&P is concerned about competition, specifically if there were to be a sizable expansion by nearby Foxwoods or if Native American tribes overcome political hurdles and realize plans to build casinos in Rhode Island or Massachusetts.

Moody's downgrades Weigh-Tronix

Moody's Investors Service downgraded Weigh-Tronix LLC and its subsidiaries. The outlook is negative. Ratings affected include Weigh-Tronix's €100 million 12.5% senior subordinated notes issued by SWT Finance BV, lowered to Caa3 from Caa2.

Moody's said the downgrade reflects growing concerns about Weigh-Tronix's ability to stimulate internal cash flow growth over the short-term to a level sufficient to adequately fund the business, service debt obligations and make progress in de-leveraging the company.

Weigh-Tronix has been hurt by a weakening operating environment in recent quarters, a trend which Moody's expects is likely to continue at least over the short-term.

In particular, Moody's anticipates demand for the company's UK and US industrial divisions is likely to remain weak, and that certain business lines such as scales provided to the US post office will likely remain significantly depressed in the near-term.

Moody's rates Silver Legacy planned notes B1

Moody's Investors Service assigned a preliminary B1 rating to Circus and Eldorado Joint Venture's (doing business as Silver Legacy Resort) planned offering of $160 million mortgage notes due 2012. The outlook is stable.

Silver Legacy is also taking out a new $40 million five-year senior secured credit facility, Moody's said. Proceeds of the notes and bank debt will be used to refinance approximately $152.3 million of existing bank debt, fund a $30 million distribution to the partners and to provide liquidity to fund general corporate purposes.

Moody's said its ratings reflect the company's small size and single property status as well as the increased leverage and reduced overall capitalization resulting from the new offering.

Pro forma debt/EBITDA is 4.0 times compared to about 3.1 times before the new financing, Moody's said.

Also incorporated in the ratings is the "substantial" decline in visits to the Reno market despite recently completed expansions by several casinos, Moody's said. In addition, Native American casinos are affecting the city more quickly than originally expected.

Moody's rates new Printpack bank line Ba3

Moody's Investors Service assigned a Ba3 rating to Printpack Holdings, Inc.'s planned new $400 million credit facility, made up of a $100 million revolver, a $100 million term A loan and a $200 million term B loan. The outlook is stable. On completion of the credit facility, Moody's will withdraw its Ba3 rating on Printpack's $71 million secured credit facility, the B2 on its $100 million 9.875% senior unsecured notes due 2004 and the B3 on its $200 million 10.625% senior subordinated notes due 2006.

Moody's said its assessment of Printpack reflects "strong cash flow, solid returns, and good liquidity." The rating agency noted Printpack has a leading position throughout niche markets and established relationships with top-tier consumer products, food and beverage customers.

Moody's noted the company continues to focus on core activities and expects process and efficiency improvements to continue throughout the intermediate term.

However Printpack has a weak historical earnings record, relatively high pro-forma financial leverage, moderate EBITA coverage of interest expense, minimal equity, and significant customer concentrations, Moody's added.

Fitch takes Continental off watch

Fitch Ratings took Continental Airlines, Inc. off Rating Watch Negative. The outlook is negative. Ratings affected include Continental's senior unsecured debt and recently issued convertible notes at B- and its TIDES at CCC.

Fitch said it removed the airline from watch in response to the latest signs of stabilization in Continental's cash flow position that have begun to appear over the last several weeks.

"After suffering an unprecedented decline in air travel demand following the events of September 11, Continental has reported steady improvements in revenue per available seat mile (RASM), a key indicator of financial performance," Fitch said. RASM was about 15% lower than year-earlier levels in December and January, better than the 25% to 30% declines reported by Continental and most of its major competitors in October-November period.

Yields remain very weak because of depressed business travel and continued discounting, booked load factors in the first quarter appear to be improving and the foundation for a return to positive operating cash flow in the second and third quarters is now stronger than at any point since Sept. 11, Fitch added.

S&P downgrades Pinnacle Entertainment

Standard & Poor's downgraded Pinnacle Entertainment Inc. The outlook is negative. Ratings affected include Pinnacle's $125 million 9.5% senior subordinated notes due 2007 and $350 million 9.25% senior subordinated notes due 2007, both cut to CCC+ from B-, and its $300 million reducing revolving credit facility due 2003, cut to B from B+.

S&P said it cut Pinnacle's ratings in response to lower-than-expected 2001 operating results, further deterioration of credit measures, and S&P's expectation that near-term debt leverage will remain high on continued competitive pressures for the owner and operator of casino facilities.

"Pinnacle faces substantial near-term competitive pressures in many markets it serves," S&P said.

Pinnacle has adequate near-term liquidity, S&P said but added that a planned Lake Charles, La., project could use much of its financial flexibility.

S&P downgrades Falcon Products

Standard & Poor's downgraded Falcon Products Inc. The outlook is negative. Ratings affected include Falcon's $100 million 11.375% senior subordinated notes due 2009, cut to CCC+ from B-, and its $70 million term A bank loan due 2005 and $30 million revolving credit facility due 2005, cut to B from B+.

S&P said it cut Falcon's ratings in response to continued weak operating results exacerbated by the company's leveraged capital structure.

Falcon suffered from further lowered demand for its products in the contract furniture and hospitality markets after the Sept. 11 terrorist attacks due to lower capital spending and the challenging environment in the U.S. hotel industry, S&P said.

Sales for the fiscal year ended Nov. 3, 2001 declined a modest 5.1%, as lower sales to hotels were somewhat mitigated by better results from the contract furniture and food service segments, S&P continued.

S&P downgrades Galey & Lord

Standard & Poor's downgraded Galey & Lord Inc. because of the possible restructuring of the company's debt. The ratings were removed from CreditWatch with negative implications but the company has a negative outlook.

Ratings affected Galey & Lord's $300 million 9.125% senior subordinated notes due 2008, cut to C from CCC+, and its $225 million revolving credit facility due 2004, $155 million term loan B due 2005 and $110 million term loan C due 2006, all cut to CC from B.

Moody's puts Murrin Murrin on review

Moody's Investors Service put Murrin Murrin Holdings Pty. Ltd.'s B3 senior secured bond rating on review for possible downgrade, affecting the company's $340 million senior secured notes due 2007 and $64 million floating-rate notes due 2005.

Moody's said it started the review because of the "continued liquidity pressures" facing Murrin Murrin and their impact on the company's ability to meet its debt service obligations (including replenishment of the debt service reserve) in March 2002 and beyond.

Moody's review will also consider the ability of Murrin Murrin and its parent, Anaconda Nickel Ltd., to tap external sources of finance to meet their liquidity problems.

Moody's puts Glencore Nickel on review

Moody's Investors Service put Glencore Nickel Pty. Ltd.'s B1 rated $300 million senior secured notes due 2014 on review for possible downgrade.

Moody's said its review will focus on performance of the Murrin Murrin project, which has been inconsistent due to significant commissioning delays. It will also look at the likelihood for continued financial support from Glencore Nickel's ultimate parent, Glencore International AG. Glencore Nickel is wholly reliant on GI for meeting its debt servicing commitments, Moody's said.

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