Moody's upgrades Crown Cork, rates new bonds B1, loan Ba3, convertibles Caa1

Moody's Investors Service upgraded Crown Cork & Seal Co., Inc. and assigned a B1 rating to its planned $1.25 billion second lien senior notes due 2010 and $500 million third lien senior notes due 2013, a Ba3 rating to its proposed $1.05 billion first lien bank facility including a $550 million revolver and $500 million term B loan maturing 2006 and a Caa1 rating to Crown Holdings, Inc.'s proposed up to $250 million convertible notes due 2008. Ratings upgraded include Crown Cork's $200 million 8% senior unsecured notes due 2023, $300 million 7.38% senior unsecured notes due 2026, $200 million 7.5% senior unsecured notes due 2096, $294 million 7% finance plc senior unsecured notes due 2006 and $277 million senior unsecured notes due 2004-2005, all raised to B3 from Ca.

Moody's said the upgrade reflects the improvement in general financial condition and near term liquidity pro-forma for the proposed debt restructurings and the disposition of assets which took place during 2002.

Moody's said it expects the stabilization in Crown Cork's financial performance evident in fiscal 2002 to continue throughout the intermediate term as operational restructurings, improved cash flow management and favorable industry trends gain traction.

The ratings are predicated on the enforceability of the financing structure and collateral packages as proposed, and the ratings are subject to final execution and review of documentation, Moody's noted.

The ratings continue to reflect Crown Cork's weak pro-forma balance sheet, less than optimal return on assets, modest coverage of interest expense after capital expenditures, and low free cash flow after asbestos payments and pension cash contributions relative to its sizable pro-forma debt of approximately $4 billion, Moody's said. The absence of tangible equity, potentially adverse fluctuations in annual pension funding requirements and/or foreign exchange, competitive pressures throughout its mature markets, and to a lesser extent, concerns about occasional losses on receivables from specific accounts further constrain the ratings.

Pro-forma liquidity is adequate as the proposed debt restructuring should smooth out and push back maturities, Moody's said.

Positives for the company are its leading position throughout its global markets, the breadth of its product offerings, and the absence of significant concentrations in its established customer base of multi-national beverage, food, and consumer products companies, Moody's said.

The ratings acknowledge the seemingly favorable trends in Crown Cork's asbestos-related litigation and settlement payments and reflect the current expectation of stabilized cash payments of less than $100 million annually throughout the intermediate term. Additionally, the ratings incorporate Crown's relatively modest exposures to volatile geographies.

Moody's raises Nextel outlook

Moody's Investors Service raised its outlook on Nextel Communications, Inc. and its Nextel Finance Co. subsidiary to stable from negative and confirmed its ratings, including its senior notes at B3, exchangeable and convertible preferred stock at Caa2, senior secured credit facility at Ba3 and speculative-grade liquidity rating at SGL-1.

Moody's said it raised Nextel's outlook because of the company's remarkably stable operating and financial performance of the company in the face of an increasingly competitive wireless marketplace, as well as the substantial delevering the company has achieved, notionally through improvements in measured EBITDA, and absolutely through the early retirement of $2.6 billion of debt and preferred securities in the second and third quarters of 2002.

Moody's cut Nextel's outlook to negative in June 2002, when it placed the rest of the non-investment grade wireless ratings on review for possible downgrade. At the time, Moody's expressed concern that the drastic deceleration of subscriber growth in the industry combined with the launch of new or recently upgraded networks by the major wireless operators would exacerbate already intense competition in the industry. This heightened competition was felt to disproportionately affect speculative grade operators, as they would be typically require more growth to support their heavier debt burdens and would lack the financial flexibility to compete compared to the investment grade rated carriers.

Since that time, Nextel has nonetheless continued to grow its market share of subscribers while maintaining its industry leading subscriber metrics, with high revenues per user and low churn, Moody's said. At the end of the third quarter of 2002, the six national wireless carriers had increased their subscriber bases (including through acquisition) by an average of 14%, while Nextel's base grew by 24% without the benefit of acquisitions.

ARPU of $71 per month is well above an industry average closer to $50, and monthly churn of 2% remains much better than the industry average of around 2.7%. In addition, Nextel has wrung substantial improvements to the company's margins through cost efficiencies, many borne out of the major outsourcing agreements the company struck in the beginning of 2002, Moody's added.

Nextel has also greatly reduced its capital expenditures through improvements in its network planning and utilization, and plans on further improvements in 2003 to keep capital expenditures substantially below prior year's levels.

The combination of these achievements has made Nextel a free cash flow generator. Cash provided by operations through the third quarter of 2002 of $1.5 billion exceeded capital expenditures of $1.4 billion for the same period, Moody's noted.

S&P cuts Burns Philp, still on watch

Standard & Poor's downgraded Burns, Philp & Co. Ltd. including cutting Burns Philp Capital Pty Ltd.'s $400 million 9.75% senior subordinated notes due 2012 to B- from B and kept it on CreditWatch with negative implications. S&P also assigned a B+ rating to Burns Philp's new $375 million bank loan series B due 2009, A$1.3 billion bank loan series A due 2007 and A$100 million bank loan due 2007 and a B- rating to Burns Philp Capital's new $150 million senior subordinated notes due 2012.

S&P said the downgrade reflects Burns Philp's appetite for large acquisitions, evidenced by its A$2.4 billion unsolicited bid for Goodman Fielder, and the likelihood that, if this bid is unsuccessful, it will pursue other large, debt-funded acquisitions.

The CreditWatch will be resolved once the outcome of the Goodman bid is known. If Burns Philp successfully acquires Goodman, the rating could be lowered by one notch. This would reflect the substantial increase in Burns Philp's debt load, and the significant integration risks associated with an acquisition of this size, S&P said.

S&P added that it expects Burns Philp's post-transaction total debt-to-total capitalization ratio to exceed 85%, its funds from operations-to-total debt ratio to be about 10%, and its interest coverage ratio to be below 2x.

If the bid is unsuccessful, the rating will be evaluated in the context of management's appetite for expansion opportunities and higher debt levels, and its plans for the funds raised from the company's high-yield bond issues, S&P added.

Moody's rates Legrand notes B1, loan Ba2, cuts existing notes

Moody's Investors Service assigned a B1 rating to Legrand SA's planned €600 million senior unsecured notes due 2012 to be issued through Fimep SA and a Ba2 rating to Fimaf SA's new €250 million senior secured revolving credit facility maturing 2009, €300 million senior secured facility maturing 2009, €683 million senior secured term loan A maturing 2009, €425 million senior secured term loan B maturing 2010 and €425 million senior secured term loan C maturing 2011. Moody's also lowered Legrand's existing $400 million 8.5% debentures due 2025 to Ba3 from Ba2. The outlook is stable. The actions conclude a review begun on Dec. 16.

Moody's said Legrand's ratings reflect its leading global market positions in the manufacturing of low voltage products and systems, particularly in key European countries; high margin and stable cash flow generation to support high levels of indebtedness; demonstrated product and operating resilience in sustained economic downturns; broad and high quality product base; technical expertise and innovative product development contributing to high margins and cash flow sustainability; and defensible market positions with relatively high barriers to entry.

Negatives are the company's highly-leveraged capital structure as a result of the LBO transaction; expected cash flow improvements and de-leveraging for the consolidated group are partly dependent on a modest upturn in economic activity, a return to more normalized rates of organic growth and a modest increase in cash flow margin; competitive threats posed by different national players and cheaper imports into key markets; a degree of integration and event risk relating to recent acquisitions and to further potential for selected acquisitions as part of the company's business strategy; uncertainty as to the pace of demand growth in light of a weak economic environment; some exposure to price fluctuations relating to key production materials; and structural issues leading to substantial bondholder subordination.

On a pro forma basis for the 12 months to Sept 30, 2002, Legrand will exhibit total debt/EBITDA (cash-pay debt only) of approximately 4.66x, EBITDA/net cash interest expense of approximately 2.64x, and (EBITDA - capex)/net cash interest expense of approximately 1.91x, Moody's said.

S&P raises LNR outlook

Standard & Poor's raised its outlook on LNR Property Corp. to positive from stable and confirmed its ratings including its corporate credit at BB.

S&P said the outlook revisions reflect the company's continued solid performance in all key aspects, such as capitalization, asset quality, profitability, and liquidity.

LNR continues to produce acceptable cash flows, with interest coverage a commendable 3.5x at Nov. 30, 2002, continuing its positive trend and showing improvement over the previous year's 3.1x, S&P said.

S&P says Georgia Gulf unchanged

Standard & Poor's said Georgia Gulf Corp.'s ratings are unchanged including its corporate credit at BB+ with a negative outlook after the company announced net income of $10 million for the fourth quarter of 2002, compared with a net loss of $5 million for the fourth quarter of 2001.

The fourth-quarter improvement stems primarily from both increased demand for PVC and higher PVC prices, which offset higher raw material and natural gas costs, S&P noted. For 2003, the company anticipates that, assuming the economy continues to improve, results could improve over 2002 results - although currently high natural gas costs present some uncertainty.

The ratings are supported by the company's average business profile, a strong history of profitability, and the company's progress toward reducing debt.

Still, the ratings incorporate recognition of the volatility in Georgia Gulf's markets and in the costs of raw materials, S&P said. Consequently, S&P said it expects that share repurchases, capital spending, and debt-financed acquisitions will be moderate, and that the company will maintain good availability under its revolving credit facility.

S&P says Russell unchanged

Standard & Poor's said Russell Corp.'s ratings are unchanged including its corporate credit at BB+ with a stable outlook by the company's announcement that it will acquire athletic gear manufacturer Bike Athletic Company for $16 million.

The acquisition will allow Russell to expand its portfolio of athletic-related products sold to the team sport and individual recreational markets, S&P said.

S&P confirms Graham Packaging, off positive watch

Standard & Poor's removed Graham Packaging Holdings Inc. from CreditWatch with positive implications and confirmed its ratings including its senior unsecured debt at CCC+ and subordinated debt at CCC+ and Graham Packaging Co.'s senior secured debt at B. The outlook is positive.

S&P said the action follows Graham Packaging's decision to cancel its immediate-term IPO plan because of unfavorable equity market conditions.

Graham Packaging's ratings reflect a below-average business profile, and very aggressive financial leverage, S&P said. The company's business risk assessment incorporates its leading share in its niche markets, strong customer relationships, an improved cost position and technological capabilities; which are offset by limited product diversity and participation in highly competitive markets.

Graham's product innovation and design capabilities, have positioned it as a leader in high-growth, value-added, "hot-fill" PET containers for non-carbonated, non-refrigerated beverages (juices, isotonics, teas) and food items, a product that has been taking share from less practical glass and metal products, S&P noted. Considerable conversion opportunities still remain in the beverage and food segments, which are expected to remain a key growth driver for Graham in the next few years.

Still, competition is expected to intensify, as other rigid plastic packaging suppliers make inroads into this small, but value-added segment, and continuing consolidation within end markets exerts pricing pressures on packaging suppliers, S&P said.

Graham remains very aggressively leveraged, although it has seen improvement, with total debt (adjusted for capitalized operating leases) to EBITDA expected to trend toward an acceptable 5.5x in the intermediate term, from about 6x as at Sept 30, 2002, S&P said. EBITDA to interest coverage is expected to gradually improve to above 2.5x, from the current level of about 2.0x supported by continuing EBITDA growth (driven by continued conversion to rigid plastic packaging in the food and beverage segments, and the benefits of European restructuring actions).

The majority shareholders, Blackstone Capital Partners and management remain committed to reviving the IPO plan, as more conducive market conditions emerge, S&P added.

Moody's cuts AmeriCredit

Moody's Investors Service downgraded AmeriCredit Corp.'s senior debt to B1 from Ba2 and maintained its negative outlook.

Moody's said the action is as a result of the significant deterioration in AmeriCredit asset quality and limited prospects of substantial improvement on the horizon.

The continuing negative outlook reflecting Moody's opinion that the firm could face challenges in executing its business plan and managing its liquidity position, particularly in an uncertain economic environment.

Moody's said that AmeriCredit's December quarter's asset quality data was substantially worse than Moody's had anticipated. Default frequency in the firm's portfolio exceeded expectations and this raises Moody's concern that AmeriCredit's portfolio has become less predictable.

Higher loss severity resulting from depressed used car prices also negatively affected the company.

Continued economic uncertainty and weak used car pricing have led to increased volatility in AmeriCredit's results, Moody's noted. This volatility increases the likelihood of further stress to the value of AmeriCredit's securitization related assets, in Moody's view.

S&P says IMC Global unchanged

Standard & Poor's said IMC Global Inc.'s ratings are unchanged including its corporate credit quality at BB with a negative outlook following the announcement of an $8 million fourth-quarter loss from continuing operations compared with $8 million in earnings in the third-quarter of 2002.

Earnings weakness reflects lower DAP prices and higher sulphur and ammonia input costs, S&P noted.

Although fourth-quarter results were softer than originally expected, and results for the first quarter of 2003 could remain soft, the company remains optimistic about the important spring planting season given higher crop prices and expectations of strong fertilizer demand.

Ratings are supported by leading global market shares and expectations of better earnings. Still, the ratings could be lowered if an expected improvement in the fertilizer sector fails to materialize or other strategic actions impair the firm's ability to restore credit protection measures to targeted levels, S&P said. In addition, a deterioration in liquidity and in bank line availability would raise the likelihood of a downgrade.

Moody's cuts Cable Satisfaction

Moody's Investors Service downgraded Cable Satisfaction International, Inc. including cutting its $150 million 12¾% senior unsecured notes due 2010 to Ca from Caa2. The outlook is negative. The action concludes a review for possible downgrade begun on Oct. 21.

Moody's said the downgrade reflects its heightened concerns regarding Cable Satisfaction's liquidity position, longer-term ability to adequately service its debt burden and the likely recovery prospects for bondholders in a downside scenario.

Moody's said it acknowledged Cable Satisfaction's recent announcement that it has secured access to a €14 million liquidity line and requested bank covenant waivers until Feb. 28, 2003 on its €100 million term loan in addition to a maturity extension request to Feb. 28, 2003.

While recognizing Cable Satisfaction's ability to put near-term funding into place, Moody's notes that a significant amount of incremental capital will be required in addition to the €14 million liquidity line to fund the company's on-going capex and interest payment obligations including the March 1 coupon payment on the company's high-yield debt.

The new ratings reflect the very high level of uncertainty with respect to the company's ability to secure a level of additional financing adequate to support the company's continued growth requirements and on terms that would allow for the on-going debt service of the company's senior unsecured bonds, Moody's added.

In addition, Moody's believes that it is now increasingly likely that some form of balance sheet restructuring will ultimately be required given Cable Satisfaction's high leverage which will likely prove to be unsustainable over time, the increased liquidity risk resulting from the company's diminished cash balances of less than €6 million at Nov. 30, 2002 and on-going non-compliance issues with bank facility covenants, and the company's significantly weakened access to the public capital markets.

Moody's rates Lamar loan Ba2

Moody's Investors Service assigned a Ba2 rating to Lamar Media Corp.'s new $1.2 billion secured bank credit and confirmed its existing ratings including its $455 million senior subordinated notes at Ba3 and Lamar Advertising's $287 million senior convertible notes due 2007 at B2. The outlook is stable.

Moody's said Lamar's ratings reflect its sizable share of outdoor advertising, particularly in the small to medium size markets and the consequent asset value. Lamar's strengths are offset, however, by the company's high leverage and aggressive acquisition strategy.

Moody's also noted Lamar's consistently strong margin performance, the benefits of a mostly local advertiser base (about 85%) which enhances the company's stability and its disciplined approach to acquisitions.

The company intends to spend about $100 to $150 million per year on acquisitions in the near term, although activity has slowed down recently as a result of generous valuations (disparity between the bid/ask).

Finally, Moody's also noted the high underlying value of the company's portfolio of outdoor assets and meaningful market capitalization (about $3.5 billion).

As of Sept. 30, 2002, lease adjusted leverage is high with adjusted debt to EBITDAR of 6 times, and cash flow coverage is modest with (EBITDAR - capex)/(interest + rent) of 1.6 times, Moody's said.

S&P cuts Trenwick

Standard & Poor's downgraded Trenwick Group Ltd. including cutting Trenwick America Corp.'s $75 million 6.7% notes due 2003 to CCC- from CCC+ and Chartwell Re Corp.'s $75 million 10.25% senior notes due 2004 to CCC- from CCC+ and removed it from CreditWatch with negative implications. The outlook is negative.

S&P said the action follows Trenwick's announcement that it added $107 million to reserves as of year-end 2002.

Following the reserve additions, tangible capital at year-end 2002 will be marginally positive, and Trenwick's ability to service its remaining obligations is increasingly uncertain, S&P said.

The reserve additions are expected to bring regulatory capital adequacy close to regulatory action levels, which further threatens the likelihood of repayment of senior creditors, S&P added.

Moody's cuts Britax

Moody's Investors Service downgraded Britax Group plc including cutting its £175 million senior secured credit facilities to B1 from Ba3 and €145 million senior unsecured notes due 2011 to B3 from B2. The outlook is negative. The action ends a review begun on Nov. 1.

Moody's said the downgrade reflects continued weak market conditions for Britax's core businesses, which Moody's anticipates will continue to constrain the company's revenue and cash flow generation ability over the next 12-18 months; the increase in debt leverage and weakness in interest cover since Moody's initial rating action in April 2002 and in relation to Moody's original expectations; the company's exposure to the airline and public safety industries, where demand for Britax products remains uncertain; and limited covenant cushion for any material deviation in the company' s financial performance.

However Moody's noted Britax's leading market position in its core markets, the company's diversified group of businesses with independent drivers, the moderately strong cash generative nature of Britax's business (due principally to minimal capital expenditure requirements), strong equity sponsorship from RBPE and a solid liquidity cushion, including a £25 million revolving credit facility, £29 million in cash on hand, and minimal senior debt amortization requirements during 2003-04.

S&P rates Cinemark notes B-, loan BB-, raises outlook

Standard & Poor's raised its outlook on Cinemark USA Inc. to positive from stable, assigned a B- rating to its proposed $150 million senior subordinated notes due 2013 and a BB- rating to its proposed $200 million senior secured bank facility and confirmed the company's existing ratings including its subordinated debt at B-.

S&P said the outlook revision reflects improvements in Cinemark's liquidity and capital structure as a result of its proposed bank loan refinancing and subordinated debt offering.

Proceeds from the debt offerings will be used to repay Cinemark's existing bank facility and a $77 million term loan due to Lehman Brothers.

The proposed transactions will moderate the company's high financial risk by substantially reducing debt maturities until at least 2007, S&P said. Cinemark's liquidity will also benefit from improved access to capital as a result of the $75 million revolving credit portion of the proposed bank loan.

These factors combined with the steady improvement in the company's credit ratios over the past two years have increased the likelihood of a rating upgrade in the intermediate term, S&P said.

The ratings on Cinemark reflect the company's quality theater circuit, its favorable operating performance relative to its peers, and its profitable non-U.S. operations, S&P added. These positives are balanced by the company's still somewhat aggressive financial profile.

Cinemark was among the first exhibitors to aggressively shift its strategy from expansion to cash generation and debt reduction, S&P noted. As a result, discretionary cash flow has increased to respectable levels over the past two years; about half of EBITDA flowed through to discretionary cash flow in 2002. The company's lease-adjusted debt to EBITDA plus rent (EBITDAR) ratio has declined but remains high at approximately 5x and its EBITDAR coverage of interest plus rent has risen to 1.8x from 1.3x in 2000.

S&P confirms Ocean Rig

Standard & Poor's confirmed Ocean Rig ASA including its $125 million floating-rate notes due 2008 and $225 million 10.25% notes due 2008 at CCC and removed it from CreditWatch with developing implications. The outlook is negative.

S&P said it put the company on CreditWatch with developing implications on May 15, 2001, pending the completion and successful contract initiation of its two drilling rigs.

Although both of Ocean Rig's drilling rigs are now in operation and the company recently completed financing transactions, S&P said it has continuing concerns over Ocean Rig's liquidity, contract position, and aggressive debt leverage.

S&P said it projects very modest free cash flow generation (after capital expenditures and debt service) in the near- to medium-term and underscores the company's exposure to recontracting risk.

In addition, S&P does not believe that Ocean Rig's current cash position is sufficient to weather a moderate period of low rig utilization and/or weak dayrates.

Ocean Rig has suffered a number of setbacks and delays throughout the drilling rig construction process. Although a significant portion of cost overruns was equity funded, the high debt component in the capital structure results in burdensome debt service obligations, S&P added.

Moody's upgrades Cinemark, rates notes B3, loan Ba3

Moody's Investors Service upgraded Cinemark USA, Inc. including raising its $105 million 8½% senior subordinated notes due 2008, $200 million 95/8% senior subordinated notes due 2008 and $75 million 9 5/8% senior subordinated notes due 2008 to B3 from Caa2 and assigned a Ba3 rating to its planned $75 million senior secured revolver due 2007 and $125 million senior secured term loan due 2008 and a B3 rating to its proposed $150 million senior subordinated notes due 2013. The outlook is stable.

Moody's said it upgraded Cinemark because the company has exceeded expectations with respect to operating performance, and is projected to continue to execute at high levels over the near-to-intermediate term based on a strong slate of films coming out of Hollywood coupled with ongoing margin enhancement initiatives.

In addition capital investments for new theaters have been scaled back over the last year and are expected to be prudently managed in future periods, permitting the company to generate increasing amounts of free cash flow.

Thirdly, Moody's cited management's demonstrated commitment to balancing growth opportunities against its goals of further reducing leverage and enhancing financial flexibility, in anticipation of a likely public equity offering and in consideration of the very turbulent period experienced by the industry on a broad-based level during the 1999-2001 period.

The extra notch in the two-notch upgrade of the company's existing senior subordinated notes is reflective of the credit enhancement gained from the company's decision to provide upstream guarantees from domestic subsidiaries (albeit on a subordinated basis) to this creditor class in conjunction with the proposed new offering and thereby eliminate the previous structural subordination.

S&P confirms Mikohn

Standard & Poor's confirmed Mikohn Gaming Corp.'s ratings including its $105 million 11.875% senior notes due 2008 at B- and removed it from CreditWatch with negative implications. The outlook is stable.

S&P said the CreditWatch resolution follows Mikhohn's announcement that it has received a waiver from its banks associated with the previous covenant violation.

In addition, S&P said it believes the company's operating performance has stabilized.

S&P said Mikohn's ratings reflect the company's narrow business focus, small cash flow base, and competitive market conditions. These factors are mitigated by Mikohn's niche position, recent improvement in operating results, and good near-term prospects for improvement.

Based on current operating trends and adjusted for operating leases, total debt to EBITDA is over 6x and EBITDA coverage of interest expense is under 1.2x, S&P said, adding that it expects these credit measures to improve in the near term as Mikohn continues to benefit from its cost-cutting measures and reduced capital spending associated with its expanded agreement with Aristocrat.

S&P confirms Liberty Group

Standard & Poor's confirmed Liberty Group Publishing Inc. and removed it from CreditWatch with positive implications. Ratings confirmed include Liberty Group Publishing's $62.813 million 11.625% senior discount debentures due 2009 at CCC+ and Liberty Group Operating Inc.'s $100 million term loan B due 2007 and $135 million revolving credit facility due 2005 at B and $180 million 9.375% senior subordinated notes due 2008 at CCC+. The outlook is stable.

S&P said the confirmation reflects the uncertainty over the timing of Liberty's planned IPO for up to $225 million of common stock that was announced in June 2002.

The ratings reflect the company's very heavy consolidated debt levels as a result of its growth through acquisition, S&P added. In addition, Liberty has a relatively small operating cash flow base and, in the long term, the company is expected to continue to seek out investment opportunities. The company has not been pursuing acquisitions over the past two years because availability under its revolving credit facility has been limited due to certain financial covenants.

Liberty has fairly stable revenues and operating cash flow throughout the advertising revenue cycle. This reflects the company's geographic diversity and its position in the various non-metropolitan markets served as the dominant source of local news and print advertising, S&P said. However, operating results over the past two years have been affected by the challenging advertising climate.

The overall financial profile has strengthened over the past year, reflecting lower debt levels and interest rates, as well as higher cash flow, S&P noted. However, the capital structure remains substantially leveraged. Consolidated debt to EBITDA is in the 7x area, and this measure is in the 9x area when it includes the exchangeable senior preferred stock at the holding company. EBITDA to total interest is in the mid-1x area, while coverage of cash interest is in the high-1x area. The discount debentures at the holding company will start to pay cash interest in 2003.

Moody's upgrades Regal

Moody's Investors Service upgraded Regal Cinemas, Inc. including raising its $145 million senior secured revolver due 2007 and $225 million senior secured term loan due 2008 to Ba2 from B1 and its $350 million 9 3/8% senior subordinated notes due 2012 to B2 from B3. The outlook was raised to positive from stable.

Moody's said it upgraded Regal because of the company's strong operating performance since emerging from bankruptcy and completing its initial public offering in 2002, as driven by the successful integration of the United Artists and Edwards Theatre chains, synergy realized from the mereger and a strong box office.

In addition, Regal has achieved meaningful growth in and absolute generation of EBITDA and free cash flow, and corresponding improvements in liquidity, balance sheet strength and overall financial flexibility.

In addition, Moody's cited Regal's simplification of the company's organizational structure pro forma for the now full ownership of United Artists following the recent redemption of the former minority stake therein.

Regal management and the industry in general has shown a more measured approach to renewed new build activity and acquisitions.

Moody's also said it expects continued improvements given the rating agency's assessment of prolonged box office strength and more disciplined growth objectives in the future.

Moody's upgrades Petrom

Moody's Investors Service upgraded of Societatea Nationala a Petrolului Petrom SA's €125 million senior unsecured notes to B2 from B3. The outlook is stable.

Moody's said that the upgrade reflects the ongoing solid cash flow and credit measures being generated by Petrom and its strong position in the Romanian downstream market, which provide a sound footing for its future development. Secondly, the company should benefit from the improvement and growth in the Romanian economy, reflected in the recent upgrade of the Romanian sovereign rating to B1.

Thirdly, the rating takes account of the expectation of limited government support for Petrom in case of need, both now and potentially even after the partial privatization planned for later this year.

Finally, while the unsecured notes are subordinated to almost all of Petrom's other debt, which is secured on fixed assets, receivables or inventories, Moody's noted that since the issuance of the

eurobond the company has become more restricted by other financial covenants in its ability to take on further meaningful secured debt.

At current levels the company's debt is well covered by its assets, Moody's said.

S&P puts aircraft debt of 8 airlines on watch

Standard & Poor's put the equipment trust certificates and enhanced equipment trust certificates of eight airlines on CreditWatch with negative implications. The airlines are Alaska Airlines Inc., America West Airlines Inc., Atlantic Coast Airlines Holdings Inc., Continental Airlines Inc., Delta Air Lines Inc., Federal Express Corp., Northwest Airlines Inc. and Southwest Airlines Co.

Ratings of several other airlines, including ratings on aircraft-backed debt, are already on CreditWatch, and will be included in an upcoming review, S&P said.

Ratings on Northwest Airlines Inc.'s NWA Trust No. 1 aircraft notes and enhanced equipment trust certificates of American Trans Air Inc. were not placed on CreditWatch as they were recently reviewed. Insured enhanced equipment trust certificates are also not placed on CreditWatch.

S&P said its review will examine the effect of ongoing significant deterioration in aircraft values and pressure on lessors and creditors to renegotiate terms with bankrupt airlines on collateral protection for bondholders.

The rating agency said it hopes to conclude its review over the next several weeks, but the near-term prospect of a possible U.S.-Iraq war could influence the timing of the CreditWatch review.

S&P also commented on individual airlines.

On Alaska Air (BB/Negative), S&P noted its losses have been among the lowest in the industry, despite very difficult airline industry conditions; the company was one of only a few airlines that was profitable in the third quarter of 2002. Alaska Air's lease-adjusted debt to capital is among the lowest in the industry (although still elevated), in the low-70% area.

For Atlantic Coast Airlines Holdings Inc. (B-/Negative), S&P described the company as having relatively small size within the high-risk U.S. airline industry and substantial operating lease burden, mitigated to some extent by favorable growth prospects, and revenue stability provided by fee-per-departure contracts with major airline partners. Atlantic Coast's financial profile has remained relatively stable within the current adverse airline industry environment.

S&P said America West Airlines Inc. (B-/Negative) has a weak balance sheet and limited financial flexibility, since it has no bank facilities and a large portion of its assets are encumbered but also relatively low operating costs, among the lowest in the industry.

Continental Airlines Inc. (B+/Negative) has a heavy debt and lease burden and relatively limited financial flexibility ($1.34 billion cash at Dec. 31, 2002, but no general bank facility and no unencumbered aircraft), which outweigh better-than-average operating performance and a modern aircraft fleet, S&P said. The airline's operating margins during the past two years have been the best among large hub-and-spoke carriers, reflecting efficient operations and good labor productivity.

Southwest Airlines Co. (A/Negative) has an extremely strong competitive position in the arkets it serves, low operating costs, a strong financial profile, and consistent profitability, even in industry downturns, S&P said. The inherent riskiness of the airline industry is a limiting credit factor. Southwest's financial profile is the strongest, by far, among U.S. airlines and is expected to remain so despite the difficult industry environment.

S&P said Federal Express Corp. (BBB/Stable) has a strong competitive position, offset by an ongoing need to fund substantial capital expenditures. The company's business and financial profile is dominated by main operating unit FedEx Express, which has a very strong market position in the domestic package express industry.

Delta Air Lines Inc. (BB/Negative) has a solid market position in the U.S. and trans-Atlantic markets and a fairly strong, though recently diminished, financial profile, S&P said. Limiting factors are the company's more modest presence in the Pacific, recent heavy losses, and the airline industry's currently very adverse environment.

Fitch cuts TGN CRIBs

Fitch Ratings downgraded Transportadora de Gas del Norte SA's CRIBs to DD from C.

Fitch said the downgrade follows non-payment of $9.5 million of interest on the CRIBs due Jan. 25.

A partial payment of $1.9 million was paid to holders on Jan. 27 corresponding to the period of July 25, 2002 through Oct. 31, 2002.

The payment had been held in the trustee account and was comprised of interest owed on the CRIBs debt from July 25 through July 31, 2002 ($300,000), at the original interest rate of 10.875%, and interest from Aug. 1, 2002 through Oct. 31, 2002 ($1.6 million) at a rate of 3.5%.

Fitch said it believes that TGN will continue to pay interest quarterly on a pro rata basis to its lenders with an interest rate cap of 3.5%.

TGN management is attempting to honor all creditors on a pari passu basis, independently of the stated payment dates of each obligation, and is not expected to replenish reserve funds (letters of credit) at the expense of paying interest to its other creditors.

Fitch cuts Cedar Brakes

Fitch Ratings downgraded Cedar Brakes I LLC's $310.6 million senior secured bonds and Cedar Brakes II LLC's $431.4 million senior secured bonds to BB+ from BBB and kept them on Rating Watch Negative.

The Cedar Brakes transactions are part of El Paso Corp.'s Qualifying Facility contract restructuring program. Cedar Brakes I and II purchase energy from El Paso Merchant Energy and resell that energy to Public Service Electric & Gas Co. under long term contracts.

Although Cedar Brakes I and II are bankruptcy-remote, indirect subsidiaries of El Paso, their ratings are constrained by the underlying credit quality of El Paso due to El Paso's guarantee of El Paso Merchant Energy's performance under the supply contracts.

The downgrades reflect El Paso's diminished credit quality, including its heightened debt leverage, weakening credit protection measures, strained liquidity position, and sizable debt maturity profile in 2003 and 2004, Fitch said. Furthermore, there are uncertainties surrounding the future business profile and financial implications resulting from El Paso's ongoing asset disposal program and wind down of energy marketing and trading activities business.

S&P cuts American Commercial

Standard & Poor's downgraded American Commercial Lines LLC including cutting its $116.507 million 12% pay-in-kind senior subordinated notes due 2008 to D from CC and $535 million credit facility to D from CCC+.

S&P said the downgrade follows American Commercial's filing to reorganize under Chapter 11 of the U.S. Bankruptcy Code.

Moody's upgrades Ryland

Moody's Investors Service upgraded Ryland Group, Inc. including raising its $100 million 8% senior notes due 2006 and $150 million 9.75% senior notes due 2010 to Ba1 from Ba2 and $100 million 8.25% senior subordinated notes due 2008 and $150 million 9.125% senior subordinated notes due 2011 to Ba2 from Ba3. The outlook is stable.

Moody's said the upgrades reflect the improvement in Ryland's financial profile, its disciplined growth strategy that eschews acquisitions, its conservative land policy, tight cost controls, and strong liquidity.

At the same time, the ratings consider the size of Ryland relative to its peer group, the ongoing share repurchase program, and the cyclical nature of the homebuilding industry.

The company's financial results and profile have improved in recent years. At the same time as it has been reducing its debt leverage (debt/cap and debt/EBITDA) to among the lowest in its peer group, it has managed to increase its returns (ROE and ROA) to among the best in its group. For the 12 months ended Sept. 30, 2002, Ryland lowered its debt/cap to 43.7% and debt/EBITDA to 1.4x while registering an ROA of 19.9% and an ROE of 25.8%. EBIT interest coverage was a strong 6.5x, Moody's said.

Moody's cuts Trenwick

Moody's Investors Service downgraded Trenwick Group Ltd. including cutting Trenwick America Corp.'s senior unsecured debt to Ca from Caa3, Trenwick Capital Trust I's trust preferred stock to C from Ca and LaSalle Re Holding Ltd.'s preferred stock to C from Ca.

Moody's said the downgrade follows Trenwick's announcement that it would post a fourth quarter reserve charge of $107 million.

Moody's notes that the $107 million reserve charge is significant in relation to the $322 million book value reported at the end of the third quarter 2002 and also the company's current market capitalization, which is well below that figure.

This recent charge further diminishes the likely value that creditors will be able to extract from the company in its restructuring efforts, which are now focused on the upcoming April 1, 2003 maturity of Trenwick's $75 million in senior debt, Moody's added. Currently, virtually all of Trenwick's financial assets are held by regulated insurance subsidiaries, limiting resources available to meet debt and preferred stock obligations.

Moody's said the severity of loss for all classes of creditors could be high.

S&P puts some US Airways ratings on negative watch

Standard & Poor's revised the CreditWatch status to negative from developing on US Airways Inc.'s 1998-1 pass through certificates, classes A, B, and C, and 1999-1 pass through certificates, classes A, B, and C.

The action followed the airline's move to reject leases of all aircraft (17 A319s and 6 A320s) that secure the 1998-1 pass-through certificates, and leases of 6 A319s that form about 15% of the collateral value for the 1999-1 pass-through certificates, S&P said.

Such lease rejections could result in either return of the aircraft or, possibly, negotiation of new leases with the creditors. Separately, US Airways says that it has reached an agreement with Airbus to restructure its order for new aircraft.

S&P cuts Sun World

Standard & Poor's downgraded Sun World International Inc. including cutting its $115 million 11.25% first mortgage notes due 2004 to D from CCC+.

S&P said the downgrade follows the announcement by Sun World's parent, Cadiz Inc., that Sun World had filed for Chapter 11 bankruptcy protection in order to secure financing for the upcoming growing season.

By filing for bankruptcy protection, the company was able to obtain $40 million in debtor-in-possession financing, which should be more than sufficient to meet its financing needs.

Prior to the bankruptcy filing, Sun World had tried to obtain $15 million in working capital funding in addition to the availability under Sun World's secured revolving credit facility, S&P noted. This additional funding would have been used to meet Sun World's seasonal peak borrowing needs from April to June.

Previously, Sun World had relied on an intercompany revolving credit facility from Cadiz, Sun World's parent, to meet its seasonal requirements. However, Cadiz had determined it could not provide such financing this year. Furthermore, Sun World's discussions with the holders of the first mortgage bonds to restructure the debt in order to obtain a larger credit facility were fruitless, S&P added.

S&P cuts Saskatchewan Wheat

Standard & Poor's downgraded Saskatchewan Wheat Pool including cutting its $150 million 6.6% medium-term notes due 2007, $150 million 7.25% medium-term notes due 2004, C$170 million revolving credit facility due 2003 and C$50 million non-revolving credit facility bank loan due 2003 to D from CCC-.

Moody's withdraws IFCO ratings

Moody's Investors Service withdrew its ratings on IFCO Systems NV following completion of the company's debt-to-equity swap.

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