S&P cuts IWO, puts IWO, US Unwired on watch

Standard & Poor's downgraded IWO Holdings Inc. and Independent Wireless One Corp. and put both of them along with US Unwired Inc. on CreditWatch with negative implications. Ratings lowered are IWO Holdings' $160 million senior unsecured notes due 2010, cut to C from CC and Independent Wireless One's $120 million senior secured term loan A, $50 million senior secured term loan B and $70 million senior secured revolving credit facility, cut to CCC- from CCC. US Unwired's affected debt is its $130 million secured bank loan at CCC and $200 million senior subordinated discount notes due 2009 at CC.

S&P said the actions are based on the companies' dwindling liquidity and bank covenant compliance problems. The auditors for US Unwired and IWO have also expressed substantial doubt about the companies' abilities to continue as going concerns.

A soft economy, competitive pressure, and high subscriber churn stemming from Sprint PCS offers to sub-prime customers have impaired the companies' cash flow growth and increased already high financial risk, S&P added.

S&P said it is concerned about the rising likelihood of bankruptcy filings or balance-sheet restructurings that result in bondholders receiving less than accreted par value.

Both US Unwired and IWO expect to be in violation of covenants on their bank credit facilities in 2003, and could lose access to these sources of liquidity, S&P said.

Without additional bank borrowing, IWO will have insufficient cash to continue the network buildout required under its agreement with Sprint PCS, and could be declared in default on the agreement. In an attempt to maintain liquidity, IWO is discussing a financial restructuring plan with its bank lenders and noteholders.

US Unwired is trying to renegotiate covenants in its facility to avoid a likely violation, S&P said. If the company is unsuccessful in obtaining an amendment and is unable to borrow from its credit facility, US Unwired believes that it would still have sufficient existing cash to continue its current business plan.

Moody's cuts General Chemical

Moody's Investors Service downgraded General Chemical Industrial Products, Inc.'s senior subordinated notes to C from Caa2 and confirmed its senior secured revolving credit facility at B3. The outlook is negative.

Moody's said the downgrade was prompted by General Chemical's announcement that secured lenders will not permit the company to make its May 1, 2003 interest payment on the senior subordinated notes and that the company will pursue a restructuring of its debt.

The ratings continue to reflect General Chemical's high leverage, limited liquidity, weak capitalization, and its weak operating performance, primarily due to low soda ash prices, Moody's said. The ratings further reflect the global overcapacity of soda ash and the uncertain timing of a recovery of soda ash prices.

The negative outlook also reflects the uncertain value of the company's assets in a potential restructuring given global soda ash overcapacity.

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