S&P cuts NTL notes to D

Standard & Poor's downgraded NTL Inc.'s corporate credit rating and senior notes to D. Ratings affected include NTL Communications Corp.'s $500 million 11.875% bonds due 2010, £125 million 9.5% notes due 2008 and $625 million 11.5% notes due 2008, cut to D from C; Cablecom (Ostschweiz) AG's CHF4.1 billion bank loan due 2010, cut to CC from CCC-; NTL Business Ltd.'s £2.5 billion bank loan due 2005, cut to CC from CCC; and NTL Communications Ltd.'s £1.3 billion bank loan due 2006, cut to CC from CCC.

S&P said its action follows NTL Communications Corp.'s failure to pay the coupons due April 1 on its 9.5%, 11.5% and 11.875% senior notes.

S&P believes NTL will not make the payment within the 30-day grace period.

Recovery prospects for bondholders are very weak, given the security provided to bank lenders and the low valuations attributed to cable assets, S&P said.

NTL's liquidity position and financial flexibility are also extremely weak and may be insufficient for the group to complete its planned recapitalization process by late 2002, the rating agency added.

S&P takes La Quinta off watch

Standard & Poor's removed La Quinta Corp. from CreditWatch with negative implications and confirmed its ratings. The outlook is negative. Debt affected includes La Quinta Properties Inc.'s various series of senior notes and medium-term notes rated BB- and its $175 million 9% series A cumulative redeemable preferred stock rated B-.

Standard & Poor's said that despite recent improvements to La Quinta's financial profile, the economic slowdown has negatively affected lodging demand and will make it more challenging for management to achieve a meaningful turnaround in the near term.

The ratings reflect La Quinta's good quality portfolio of branded properties, which are expected to generate a more stable level of cash flow as management progresses in rebuilding its lodging business, S&P said.

However, the company suffers from high debt leverage and the expectation that the lodging environment will remain challenging in the near term, S&P added.

S&P keeps Orius loan on watch

Standard & Poor's said Orius Corp.'s senior secured bank loan rated CC remains on CreditWatch with negative implications.

Orius said it is negotiating an amendment and waiver to its bank facility, S&P noted.

If the company is unsuccessful, the bank loan rating will be changed to D and the corporate credit rating to D from SD.

If an agreement is reached, S&P said it will review the amendment terms to determine the credit impact.

S&P cuts Pentacon

Standard & Poor's downgraded Pentacon Inc. including lowering its $100 million 12.25% senior subordinated notes due 2009 to D from C and its $85 million credit facility to CC from CCC. The credit facility remains on CreditWatch with negative implications.

S&P said the action follows Pentacon's failure to make the interest payment due April 1 on its 12.25% notes.

S&P puts Acme Television on watch

Standard & Poor's put Acme Television LLC/Acme Finance Corp. on CreditWatch with negative implications. Ratings affected include Acme's $115 million 10.875% senior discount notes due 2004 rated CCC+ and its $40 million revolving credit facility due 2002 rated B-.

S&P said its action follows Acme's announcement that it will acquire a Madison, Wis. TV station for $5.6 million in cash.

Although the station may offer a longer term cash flow opportunity, the purchase hurts ACME's already dwindling liquidity, S&P said. In addition, the station is a startup, so potential losses could further impair the company's weak credit measures.

Pro forma for the station purchase and an April 1 $9.5 million bond interest payment, S&P estimated Acme has less than $5 million in cash. The rating agency said Acme will probably soon need to borrow from its $30 million revolving facility.

S&P rates Fleming notes B+

Standard & Poor's assigned a B+ rating to Fleming Cos. Inc.'s planned $260 million of senior subordinated notes due 2012 and confirmed the company's existing ratings. The outlook is negative.

S&P noted Fleming has demonstrated positive operating trends and solid financial progress over the past two years, providing it with some cushion to enable Fleming to get through a period of adjustment related to Kmart Corp.'s bankruptcy filing. Kmart accounted for about 20% of Fleming's $16 billion of revenues in fiscal 2001.

The ratings are supported by Fleming's designation as a critical vendor by the bankruptcy court, giving it priority in payment over other vendors, the expectation that Fleming will continue its supply contract with Kmart, and S&P's belief that Kmart will emerge from bankruptcy, S&P said.

Fleming's management has estimated that revenues from Kmart would decline by about $900 million from previous expectations, with $400 million attributable to lost sales from the closed stores and $500 million from lower volumes in existing stores, S&P noted. The anticipated $10 million negative impact on net earnings for fiscal 2002 is relatively modest.

The lower than expected volume resulting from the Kmart bankruptcy filing is being partially offset by gains in distribution from new and existing customers, S&P added. Growth in non-Kmart customers was 4% in fiscal 2001 and is expected to be 5% in fiscal 2002.

S&P cuts Versatel

Standard & Poor's downgraded Versatel Telecom International NV and changed the CreditWatch to negative from developing. Ratings affected include Versatel's senior notes and senior convertible notes, cut to CC from B-.

S&P said the action follows a revision of Versatel's exchange offer to its bondholders.

Under the terms of the proposal, which covers all the company's outstanding high-yield and convertible debt, bondholders are being offered a mix of cash and shares in exchange for their notes, S&P said.

The offer has now been changed to increase the cash and equity available to bondholders, should they vote in favor of the proposed restructure, but also comes with the explicit possibility of the company seeking protection from the company's creditors through a court filing, S&P added.

S&P said it considers that the explicit prospect of bondholders' rights being severely impaired in a court-enforced settlement is tantamount to a default.

Moody's confirms Interstate Bakeries

Moody's Investors Service confirmed the Ba1 senior implied and senior secured ratings for Interstate Bakeries Corporation and its guaranteed subsidiaries.

Moody's said its action follows Interstate's announcement it will repurchase 7.4 million shares from Nestle SA for approximately $160 million in cash.

Moody's said it confirmed Interstate's ratings because the company has successfully reduced its leverage and improved its operating performance over the past year, thereby improving its financial flexibility ahead of this stock repurchase.

Over the past nine months, Interstate has reduced its debt by over $95 million and improved its operating profit by over 16% excluding one-time charges, Moody's noted.

The outlook remains negative because of the challenges Interstate faces from operating in a highly competitive and relatively low margin business, its history of declining market share and challenges in improving its operating performance.

Moody's downgrades Crown Central

Moody's Investors Service downgraded Crown Central Petroleum Corp. including cutting its $125 million 10.875% senior unsecured notes due 2005 to Caa1 from B2. The outlook is negative.

Moody's said the downgrade reflects Crown's weak financial performance over a sustained period of time, limited corporate capital resources and low returns, which have restrained investment in the business.

Crown continued to report losses as refinery markets improved in 2000 and only modest earnings in the first nine months of 2001, the rating agency said. It expects that fourth quarter 2001 and first quarter 2002 results will be pressured by weak refining market conditions, although refinery markets have gained strength since the end of March.

Crown's two refineries, both in Texas, run light sweet crude, are relatively small and would require material capex to comply with new fuels regulations, Moody's added. If not sold, the refineries could be shut down by 2005 under current regulations if the capex to comply with new fuels specifications is not made.

S&P rates SC Johnson Commercial notes B, bank debt BB-

Standard & Poor's assigned a B rating to S.C. Johnson Commercial Markets Inc.'s planned offering of $500 million senior subordinated notes due 2012 and a BB- rating to its $200 million revolving credit facility due 2008, $100 million revolving credit facility due 2008, $250 million tranche A term loan due 2008 and $650 million tranche B term loan due 2009. The outlook is stable.

Moody's downgrades Protection One

Moody's Investors Service downgraded Protection One Alarm Monitoring, Inc. Ratings affected include Protection One's $176.8 million 7.375% senior unsecured notes due 2005, lowered to Caa1 from B3 and its $203.7 million 8.125% senior subordinated notes due 2009, $41.8 million 13.625% senior subordinated discount notes due 2005 and $23.8 million 6.75% convertible senior subordinated notes due 2003, all lowered to Caa3 from Caa2. The outlook is negative.

Moody's said negative outlook reflects Protection One's unresolved operations problems and uncertainty surrounding long-term resolution of its liquidity issues.

Inability to find a cost-effective model for acquiring subscribers or failure to extend or replace the revolving credit facility could result in a further downgrade, Moody's said.

In addition, the grant of collateral to a bank lender likely would result in ratings downgrades for the senior notes and senior subordinated notes due to their becoming effectively subordinate to the liquidity facility. Unwillingness or inability of Westar to continue providing financial support to Protection One also would cause downward rating pressure.

Moody's said Protection One's ratings reflect its leveraged financial condition, the significant cash investment required to obtain new subscribers, Moody's belief that the customer turnover rate substantially exceeds industry norms and the company's continued commitment to debt and equity repurchases.

Moody's said it believes Protection One will experience difficulties refinancing with an external creditor the unsecured revolving credit facility due January 2003 now held by its parent Westar Industries, Inc.

Moody's confirms CSG

Moody's Investors Service confirmed its ratings on CSG Systems, Inc., affecting $370 million secured credit facilities rated Ba2. The outlook is stable.

Moody's said it examined CSG's ratings because of a continuing dispute with AT&T over the sharing of billing data and the possible rating consequences if resolution of the disagreement leads to substantially adverse changes in the current contract between CSG and AT&T.

Moody's said the stable outlook reflects its expectations that CSG's integration of Kenan will be successful and that CSG will still be able to amortize debt ahead of schedule even if the disagreement with AT&T leads to pricing modifications.

CSG's ratings incorporate the company's size relative to its customers and competitors and its concentrated customer base, especially its reliance on AT&T Broadband for a significant proportion of revenue and operating profit.

However, the ratings also recognize CSG's importance in its customer's billing process, the high barriers to switching once a billing system has been adapted and the significant investment made by CSG in the development of sophisticated billing software, Moody's said.

Moody's rates new Ventas notes Ba3

Moody's Investors Service assigned a Ba3 rating to the upcoming $400 million offering of senior unsecured notes by Ventas Realty LP and Ventas Capital Corp. The outlook is negative.

Moody's said the Ba3 ratings reflect Ventas' leveraged capital structure and relatively weak debt protection measures, its significant exposure to one tenant, Kindred Healthcare, its focus on highly regulated health care segments - skilled nursing facilities and long-term acute care hospitals - and the challenges of operating in a highly competitive and regulated industry.

Moody's said it also concerned about potential execution risk related to management's plan to substantially grow and to diversify by health care property type and by tenant.

Positives include Ventas' demonstrated ability to successfully manage under stressful market conditions, including the bankruptcy of its key tenant, an experienced senior management and overall good asset quality and property-level cash flow coverages, Moody's said.

Moody's also noted Ventas has been trying to delever the company.

Moody's described Ventas as highly leveraged, with total debt to recurring EBITDA at roughly 4.8 times and secured debt 40% of total assets. Fixed charge coverage adjusted for the government settlement payment is weak at 2.0 times.

S&P rates Ventas corporate credit BB-

Standard & Poor's assigned a BB- corporate credit rating to Ventas Inc. and its operating partnership Ventas Realty LP The outlook is stable.

S&P said the ratings reflects Ventas' large portfolio of health care-related assets, which is diversified by asset type and geographic location.

The rating also reflects built-in internal growth through rent step-ups that will benefit cash flow, S&P said.

Negatives include Ventas' reliance on one tenant for substantially all of its revenues, low coverage measures, limited financial flexibility and the potential for reductions in current government reimbursement rates.

S&P cuts Budget

Standard & Poor's downgraded Budget Group Inc., including cutting its corporate credit rating to SD from CCC and its $400 million 9.125% senior notes due 2006 to D from CC.

S&P downgrades ITC^DeltaCom

Standard & Poor's downgraded ITC^DeltaCom, Inc. and kept it on CreditWatch with negative implications.

Ratings affected include ITC^DeltaCom's $200 million 11% senior notes due 2007, $160 million 8.875% senior notes due 2008, $100 million 4.5% convertible subordinated notes due 2006 and its $125 million 9.75% senior notes due 2008, all cut to C from CC, and Interstate FiberNet Inc.'s $160 million revolving credit facility B, cut to CC from CCC-.

S&P puts Doane Pet on watch

Standard & Poor's put Doane Pet Care Co. on CreditWatch with negative implications.

Ratings affected include Doane Pet Care's $100 million revolving credit facility due 2005, $62.5 million term loan due 2005, $123.9 million term loan due 2005, $123.9 million term loan due 2006 and €75 million term loan due 2005, all rated B+, and its $150 million 9.75% senior subordinated notes due 2007, rated B-.

Moody's rates new Fleming notes at B2

Moody's rated Fleming Cos. Inc.'s new $260 million 10-year senior subordinated notes at B2, and confirmed its existing ratings including its $729 million secured credit facilities at Ba2, its $355 million 10 1/8% senior notes due 2008 at Ba3 and its $250 million 10½% senior subordinated notes due 2004, $400 million 10 5/8% senior subordinated notes due 2007 and $150 million 5¼% convertible senior subordinated notes (2009) at B2. The outlook is stable.

The ratings reflect the company's leveraged financial condition and that directly, or indirectly through customers such as Kmart, the company competes with respected retailers such as Wal-Mart (senior unsecured Aa2) and Target (senior unsecured rating of A2).

The uncertainty related to resolution of the Kmart bankruptcy, Fleming's single most important customer, restrains the ratings. The intense competition within the fragmented distribution industry and the necessity to replace clients lost in the consolidating supermarket industry also impacts Moody's views of the risks facing Fleming.

The stable outlook reflects Moody's view that Fleming's ratings will be constrained until the status of Kmart becomes clearer and that significant debt protection measure improvements resulting from higher revenue and greater efficiencies cannot reliably be expected over the intermediate term.

Factors that could lead Moody's to consider a negative rating action include materially adverse effects from the Kmart situation or inability to replace the normal attrition of wholesale customers.

For Moody's to consider a positive rating action, the company would need to diversify its wholesale revenue base, to successfully continue the retail strategy of expanding the number of price-impact supermarkets, and to make meaningful improvements in debt protection measures.

S&P downgrades EOTT

Standard & Poor's downgraded EOTT Energy Partners LP and kept it on CreditWatch with negative implications. Ratings affected include EOTT's $235 million 11% senior notes due 2009, lowered to B- from BB-.

Moody's upgrades New York Community

Moody's Investors Service upgraded the trust preferred stock of New York Community Bancorp, Inc. to Ba1 from B2. The outlook is stable. The action completes a review for possible upgrade begun after the merger of New York Community and Richmond County Financial Corp.

Moody's said it raised the ratings because of New York Community's strengthened deposit and commercial banking franchises arising from the merger.

The higher rating also takes into account New York Community's continued excellent asset quality and conservative underwriting standards, the financial flexibility provided by its efficient operating platform, and its above average profitability indicators, Moody's said.

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