Moody's rates Team Health's proposed loan Ba3, upgrades notes

Moody's Investors Service assigned a rating of Ba3 to Team Health Inc.'s proposed $300 million credit facility and upgraded the company's $100 million 12% senior subordinated notes due in 2009 to B2 from B3. Also, the company's senior implied rating was upgraded to Ba3 from B1 and the senior unsecured issuer rating was upgraded to B1 from B2.

The proposed credit facility, according to Moody's, will consist of a $75 million five-year revolver, a $75 million five-year term loan A and a $150 million 61/2-year term loan B. The new loan will be used to refinance existing bank debt and to fund the acquisition of Spectrum Healthcare Resources, Moody's said.

The new ratings and upgrades "reflect the improvement in Team's credit profile...the company's modestly improving and very consistent performance and the company's leading market position," Moody's said. Also, in the company's favor is its "diversified contract base" and its maintenance of long-term relationships with customers, Moody's added.

Negative factors that affected the ratings, according to Moody's, include the competitiveness of the industry, "reimbursement and pricing pressures from Medicare and payors, ongoing challenges with collections" and risk related to the acquisition of Spectrum.

Moody's rates Edwards Theatres credit facility B2

Moody's Investors Service assigned a B2 rating with a positive outlook to Edwards Theatres Inc.'s $180 million senior secured term loan due in 2005. Moody's also announced a senior unsecured issuer rating for the company of Caa1 and a senior implied rating of B2.

According to Moody's, the rating reflects the company's high financial leverage, moderate fixed charge coverage by pre-rent cash flow and high levels of competitive risk within its market.

Positive aspects of the rating reflect "good asset quality on the whole for the remaining theater circuit post-reorganization", "evidence of strong relative positioning" in the company's markets and the prospect of improved operating performance under a pared-down overhead infrastructure, Moody's said.

The acquisition of Edwards Theatres by Regal Entertainment Group was, according to the rating agency, the main stimulus behind the positive outlook on the company's ratings. "The implications of this prospective consolidation include an assumed level of fairly materially improved margin performance under the Regal operating profile, particularly on the film rental and concession cost line items," the Moody's release said. "The ratings would likely be elevated to the Regal-equivalent bank debt level (B1 at present) upon consummation of the proposed roll-up."

Moody's downgrades Covanta

Moody's Investors Service downgraded Covanta Energy Corp.'s senior secured debt rating to Caa3 from Caa2. The company's subordinated debt rating of Ca was confirmed.

The downgrade is in response to Covanta's filing for Chapter 11 with the U.S. Bankruptcy Court and obtaining a commitment for $463 million of debtor-in-possession financing from its bank group, Moody's said.

"The Chapter 11 filing came after the company was unable to complete a satisfactory restructuring and attract outside capital since it announced in December that it was pursuing strategic alternatives," the rating agency said. "The company has determined that reorganization under Chapter 11 is the only alternative available to permit it to accomplish its long-term goal of disposing of its remaining non-core entertainment and aviation businesses and focusing on its core waste-to-energy, independent power and water businesses."

S&P rates American Seafoods notes B, bank debt BB

Standard & Poor's assigned a B rating to American Seafoods Group LLC and American Seafoods Inc.'s proposed $175 million of senior subordinated notes due 2010 and a BB rating to its planned $390 million senior secured credit facility.

S&P said the bank loan rating is one notch higher than the corporate credit rating because it is reasonably confident of full recovery of principal due to the value of the assets, which are primarily the firm's vessels, its fishing rights, quota share allocations and licenses, all of which are fully transferable.

Overall, S&P said the ratings reflect American Seafoods' high level of debt following its recapitalization by Centre Partners Management LLC; its participation in a competitive, commodity-oriented business (about 70% of revenues); exposure to foreign currency risk (about 40% of revenues are yen denominated); and quota limitations.

Positives are its leading position as the largest and lowest cost producer in the industry, a proven track record under the new regulatory environment, its hedging strategy (about 80% of the next 12-months Yen revenues are fixed), and an experienced management team, S&P said.

S&P upgrades Foot Locker

Standard & Poor's upgraded Foot Locker Inc. including raising its corporate credit rating to BB+ from BB.

S&P said it raised Foot Locker's ratings in response to its improved credit profile, its strengthened operating performance and more favorable industry conditions.

S&P added that it anticipates Foot Locker's financial profile will remain moderate.

Industry fundamentals in the athletic footwear industry continued to recover in 2001 with favorable demand trends driven by renewed interest in athletic footwear, product innovation from manufacturers and square footage reduction in the industry, S&P said. "Still, athletic footwear trends depend on new technology and new fashion to drive sales, and consumer tastes can change quickly."

The rating agency noted Foot Locker's significant progress in improving operating performance over the past two years. Same-store sales increased 5% in 2001, following an 11% increase in 2000.

In addition, the company rationalized its store base and improved productivity through tighter inventory controls and cost-cutting measures, resulting in operating margins increasing to about 16% in 2001 from 12% in 1999, S&P added.

Moody's puts United Artists on upgrade review

Moody's Investors Service put United Artists Theatre Co. on review for upgrade including its $250 million senior secured term loan due 2005 rated B3.

Moody's said its action follows the announcement that United Artists will be combined with Regal Cinemas (B1 senior implied rating) and Edwards Theatres (B2 senior implied rating) under the much larger umbrella of Regal Entertainment Group.

As a result, United Artists' bank debt has strong potential for some level of rating upgrade given the comparatively better credit profile of the consolidated entity, and the prospect of improved operating performance under a pared-down overhead infrastructure and with more efficient resource allocation for United Artists in particular, as well as the Regal Cinemas and Edward Theatres entities compared to when they were operated on stand-alone bases, Moody's said.

Moody's rates Tesoro notes B1, bank debt Ba2

Moody's Investors Service assigned a B1 rating to Tesoro Petroleum's proposed $450 million of senior subordinated notes and a Ba2 to its $1.225 billion amended and restated senior secured bank credit facility. Moody's also confirmed Tesoro's B1 senior subordinated note and Ba2 senior implied ratings. The outlook is negative.

After three fully priced leveraged refinery purchases, Moody's said the negative outlook signals that the ratings are sensitive to: 2002 sector margin trends (recently firming); Tesoro's estimates of its mid-cycle margins; the accuracy of its pro-forma capital spending, individual refinery performance, and cash flow estimates; and to energy cost and floating interest rate pressures.

The ratings have minimal margin for Tesoro to fall behind on debt reduction, Moody's said, adding that it would expect Tesoro to tap additional equity "at its earliest acceptable convenience."

Moody's downgrades GenTek

Moody's Investors Service downgraded GenTek Inc. and put the ratings on review for possible further downgrade.

Ratings affected include GenTek's $300 million senior guaranteed secured revolving credit facility maturing 2005, $100 million senior guaranteed secured term loan A maturing 2005 and $150 million senior guaranteed secured term loan B maturing 2005, all cut to B3 from B1, and its $200 million senior guaranteed subordinated notes due 2009, cut to Caa3 from B3.

Moody's said it cut the ratings after GenTek announced fourth quarter and full year 2001 losses, significant write-offs (2001 charges totaled $247 million, consisting of $187 million of restructuring and impairment charges; a $31 million inventory write-off; and a $29 million accounts receivable write-off), the qualified opinion issued by its auditors as to going concern for its 2001 financial statements, and the company's indication that it would not be in compliance with its credit agreement as of March 31, 2002 and that it is in discussions with its lenders regarding a possible amendment to its senior credit facility.

Moody's said its review will focus upon evaluating the ability of the company to successfully amend its credit facility, the near and intermediate term outlook for a potential recovery in its business segments, and potential creditor recovery values in the event of a possible restructuring.

Moody's cuts Sierra Pacific senior to Ba2

Moody's downgraded the senior unsecured ratings of Sierra Pacific Resources to Ba2 from Baa3. Moody's also downgraded the credit ratings of Sierra Pacific's utility subsidiaries Nevada Power Co. and Sierra Pacific Power Co. All the ratings, which previously carried a negative outlook, remain under review for possible further downgrade.

The downgrade reflects the unexpectedly harsh decision in Nevada Power's deferred energy rate case. On March 29, Nevada regulators disallowed the recovery of some $437 million of the $922 million in deferred energy costs that had accumulated over the past year, asserting the costs were not prudent.

Meanwhile, Moody's will also continue to assess the ability of Sierra Pacific and its subsidiaries to improve credit measures as management sorts through the various challenges created by the decision. Additionally, Moody's will evaluate the near-term liquidity requirements, particularly over the next 6-12 months.

S&P upgrades Unova

Standard & Poor's upgraded Unova Inc. and removed it from CreditWatch with developing implications. The outlook is negative.

Ratings affected include Unova's $100 million 6.875% senior notes due 2005 and $100 million 7% senior notes due 2008, both raised to CCC+ from CCC.

S&P downgrades Tesoro

Standard & Poor's downgraded Tesoro Petroleum Corp. and removed it from CreditWatch with negative implications. The outlook is stable.

Ratings affected include Tesoro's $300 million 9% senior subordinated notes due 2008 and $215 million 9.625% senior subordinated notes due 2008, both lowered to B+ from BB-, and its $225 million senior secured credit facility due 2006 and $750 million senior secured credit facility due 2007, both cut to BB+ from BBB-.

S&P rates new Panavision notes CCC+, bank debt B

Standard & Poor's assigned a CCC+ rating to Panavision Inc.'s new $250 million senior secured notes due 2009 and a B rating to its $30 million revolver due 2005 and $150 million term loan B due 2005.

S&P also downgraded the company's existing ratings including cutting PX Escrow Corp.'s $150 million 9.625% senior subordinated discount notes due 2006 to C from B- and its existing bank debt to B from B+. The existing ratings are on CreditWatch with negative implications.

S&P downgrades Kinetek

Standard & Poor's downgraded Kinetek Inc. including lowering its $270 million 10.75% senior notes due 2006 to B- from B.

S&P removes Crescent Real Estate from watch

Standard & Poor's removed Crescent Real Estate Equities, LP from CreditWatch with negative implications and confirmed its existing ratings.

Ratings affected include Crescent's $150 million 6 5/8% senior unsecured notes due 2002 and $250 million 7 1/8% senior unsecured notes due 2007, both rated B+, and Crescent Real Estate Equities Co.'s $200 million 6¾% series A convertible cumulative preferred stock, rated B.

S&P rates Team Health loan B+

Standard & Poor's assigned a B+ rating to Team Health Inc.'s new bank facility including its $75 million senior secured revolving credit facility due 2007, its $75 million senior secured term A loan due 2007 and its $150 million senior secured term B loan due 2007. It raised the outlook to positive from stable.

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