S&P rates Titan notes B, loan BB-

Standard & Poor's assigned a B rating to Titan Corp.'s planned $200 million senior subordinated notes due 2011 and a BB- rating to its $50 million senior secured bank loan due 2009. S&P also confirmed its senior secured debt at BB-. The outlook is stable.

S&P said Titan's stable cash flow base limits downside credit risk.

Management is expected to structure and pace acquisitions to support current credit quality and reduce debt over time from free cash flow generation, the rating agency added.

Capital expenditures are moderate, in the $20 million area, and earnings and cash flow visibility is supported by a respectable contract backlog, exceeding $4 billion. However, pro forma debt to EBITDA remains high, at more than 6x, with EBITDA interest coverage above the 3x area, S&P said, adding that it expects Titan to generate moderate levels of free cash flow, which coupled with the proceeds of any asset sales from discontinued operations, is expected to be used primarily to reduce debt levels.

S&P rates Lin TV's convertible and notes at B

Standard & Poor's assigned a B rating to Lin Television Corp.'s $200 million senior subordinated note issue due 2013 and $100 million exchangeable senior subordinated note issue due 2033. The outlook is stable.

Proceeds are expected to be used to refinance existing debt.

Ratings reflect the company's high financial risk from debt-financed TV station acquisitions, expectations of further purchases that could restrain financial profile improvement and the mature growth prospects of the TV station business, S&P said.

Offsetting these factors is the company's stations' leading positions in midsize markets, good geographic and network affiliation diversity, decent margin and free cash flow potential, and fairly robust station asset values, S&P added.

For the 12 months ended March 31, EBITDA was about 41%, EBITDA coverage of total interest was more than 3 times and total debt to EBITDA was about 5.1 times. Total debt plus debt guaranteed by the ultimate parent company, Lin TV Corp., divided by consolidated EBITDA was approximately 6.1 times at the end of the 2003 first quarter.

S&P confirms GenCorp

Standard & Poor's confirmed GenCorp Inc. including its senior secured debt at BB+ and subordinated debt at B+. The outlook remains stable.

S&P's confirmation follows GenCorp's announcement that it will purchase the assets related to the propulsion business of Sequa Corp.'s Atlantic Research Corp. as well as the shares of ARC UK Ltd. for $133 million, to be financed with newly issued debt.

The acquisition of ARC's propulsion business will weaken GenCorp's credit measures somewhat, but the firm's financial profile will still be appropriate for current ratings, S&P said.

In addition, the transaction will improve GenCorp's position in the market for solid propulsion systems for tactical missiles.

GenCorp will not be purchasing the airbag inflator business of ARC, but will subsequently enter into a long-term agreement to provide propellant to ARC Automotive.

The additional debt taken on to finance the acquisition is expected to increase debt to capital to almost 60% from around 53% at the end of February 2003, S&P said.

S&P rates Avaya notes B+

Standard & Poor's assigned a B+ rating to Avaya Inc.'s planned $175 million add-on sale of senior secured notes, confirmed its senior secured debt at B+ and senior unsecured debt at B and lowered its corporate credit rating to B+ from BB-. The outlook is stable.

With the reduction in the amount of first-priority debt contained in Avaya's revolving credit facility to $250 million from $561 million, S&P said it has determined that prospects for recovery for second-priority senior secured note and senior unsecured debt holders have improved and the notching of these securities has been changed to reflect the new capital structure.

The downgrade in Avaya's corporate credit rating reflects weakened profitability and debt protection metrics, S&P said. The new rating is based on the expectation that the weakness will continue, partially offset by a strong market position in enterprise telephony systems and services.

S&P said it expects that Avaya's cash flow protection will remain at levels that are consistent with the new rating. The March 2003 quarter indicated a stabilization of revenues, including the connectivity business, at levels of $1 billion-$1.1 billion. Improvements in operating margins, which increased to 10.6% in the March 2003 quarter from 7.7% in the December 2002 quarter, reflected cost reduction actions taken over the past year.

Still, based on EBITDA for the four quarters ended March 31, 2002, of $233 million, and total debt, including non-funded sources such as operating leases, of $1.4 billion, total debt-to-EBITDA was 6x.

Moody's rates LIN notes B2, raises outlook

Moody's Investors Service raised its outlook on LIN TV Corp. to positive, confirmed its existing ratings including its $192 million senior secured revolver and $175 million term B at Ba2 and $210 million senior notes at B1 and assigned a B2 rating to its new $200 million senior subordinated notes and $100 million senior subordinated exchangeable debentures.

Moody's said the ratings and positive outlook reflect the company's better-than-expected operating performance and strengthened balance sheet, combined with Moody's expectation that these trends will continue over the next couple of years, and notwithstanding the uncertain market environment of the recent past and over the near term.

The ratings are constrained by the persistent presence of high event risk, and balanced by management's commitment to limit financial leverage to 6 times debt-to-EBITDA in the course of meeting its strategic business objectives.

The ratings also incorporate LIN's very good liquidity, as well as the substantial underlying perceived asset value in comparison to its debt burden, and the presence of a strong management team that has increasingly demonstrated high levels of fiscal prudence in the pursuit of its strategic business objectives, Moody's said.

Following the new issuance, LIN's cash flow coverage will improve given the lower coupons anticipated for the new securities.

Moody's confirms Avaya

Moody's Investors Service confirmed Avaya, Inc. including its senior secured notes at B2 and senior unsecured notes (LYONs) at B3. All outlook on all ratings remains stable except the LYONs which are negative.

Moody's said the existing ratings and outlooks reflect Avaya's weak operating performance, which has generally been in line with Moody's expectations, successful execution on its cost reduction plan, improved balance sheet liquidity and leadership position in the enterprise integrated telecommunications solutions market.

Concerns remain regarding the timing of a turnaround in industry enterprise IT spending, the company's high level of gross debt relative to its operating and free cash flow generation, the substantial reduction in its bank credit facility and its sizable pension liability.

The stable outlook reflects Moody's view that Avaya's increased cash position should be sufficient to carry it through the next 12 months as the company prepares for a rebound in enterprise IT spending.

The negative outlook on the LYONs reflects Moody's concerns that it is possible that they may be restructured in the future.

While the success of the proposed debt issuance and the revised terms of the credit facility are positive developments in addressing the redemption of the LYONs, the ability to redeem the full outstanding amount in cash remains restricted.

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