S&P downgrades DVI to CCC+

Standard & Poor's downgraded DVI Inc.'s long-term counterparty credit rating to CCC+ from B, following the announcement that the SEC has taken the position that the company's most recent 10-Q filings are deficient. The ratings were removed from CreditWatch with negative implications, where they were placed on June 5, 2003. The outlook is negative.

The concern is that this SEC position may cause the company to be in default of covenants within certain debt agreements.

"Additionally, since many of the DVI's debt obligations contain cross-default or cross-acceleration provisions, a successful claim of default would have serious adverse consequences," said credit analyst Steven Picarillo.

Moody's downgrades DVI debt to Caa3

Moody's Investors Service downgraded DVI Inc.'s senior unsecured debt rating to Caa3 from B3. The rating outlook is negative.

The downgrade is a result of the serious implications related to the company's disclosure that the Securities and Exchange Commission has taken the position that DVI's March 31, 2003 Form 10-Q is deficient. As a result, DVI may be in default of certain covenants within its debt indentures or other financing agreements, Moody's said.

A covenant default could lead to the cross-default and/or cross-acceleration of a number of debt obligations. If this occurs, the company may have a hard time to manage its debt, Moody's added.

Furthermore, even if DVI is not found in default of its covenants, there may be problems raising capital to support its business operations and refinance its maturing debt unless the company manages to regain the confidence of creditors.

The primary reason for the negative outlook is that the rated senior notes would likely face a loss of principal in a default scenario given their structural subordination to the company's other creditors.

Fitch lowers DVI senior unsecured debt to CCC

Fitch Ratings downgraded DVI Inc.'s senior unsecured debt rating to CCC from B+. The rating remains on Rating Watch Negative.

The downgrade reflects the increasing challenges that the company must overcome in refinancing its $155 million of senior unsecured debt due in February 2004. Fitch said that it believes that management may have underestimated the financial markets' reaction to an auditor's resignation in the current environment, and that the resignation itself is more serious in nature than the underlying issues.

Furthermore, the Securities and Exchange Commission's rejection of the company's financial statements for the quarterly period ending March 31, 2003 could impact the company's ability to draw upon its liquidity facilities, which are essential for day-to-day operations and the delinquent filing status is expected to prohibit DVI from accessing debt and equity capital markets until it is cured.

Lastly, the company will likely need to select a new auditor and that auditor may need to audit three full years of DVI's financial statements. This could result in the company not being able to file timely financial statements for its fiscal year ending June 30, 2003.

The Rating Watch Negative status continues to reflect the need for DVI to hire a new auditor and to obtain timely audited financial statements, and that the company may, in the future, be in default of one of its technical covenants requiring timely quarterly financial statements, Fitch added.

Moody's rates Getronics' notes (P) Caa1

Moody's Investors Service assigned a (P) Caa1 rating to Getronics N.V.'s Euro 250 million 13% senior subordinated bonds due 2008 and upgraded the company's senior implied rating to B2 from Caa1 and senior unsecured issuer rating to B2 from B3. Furthermore, the ratings for the company's existing bank facility and subordinated convertible bonds have been withdrawn. The outlook for all ratings remains negative.

The upgrade reflects the company's improved liquidity position and reduced leverage following the sale of the GCRS human resources division and proposed restructuring of the company's senior subordinated bonds.

The ratings continue to positively reflect Getronics' strong position in the global ICT market, the company's broad product offering and significant market expertise and the company's large blue chip customer base, Moody's said.

However, ratings also reflect the challenging operating environment that has characterized the information and communication technology market, limited visibility with respect to future demand for ICT products, the loss of cash flow attributed to two of the company's most profitable operations which have been divested over the past year and the very limited profitability of the company pro-forma for these disposals, execution risks associated with the company's plan to further reduce costs, restructure operations, and align capacity with demand, a sizeable pension deficit of Euro 183mn at December 2002 and the on-going challenge of managing a broad base of multi-national operations spread across a number of different countries, Moody's added.

The negative outlook reflects the challenges inherent in executing on the company's business restructuring plan combined with the difficult operating environment.

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